South America's Best Stocks

Chinese and Indian stocks? They're sooo last year. At least that seems to be the case among more than 70,000 investors participating in Motley Fool CAPS, the Fool's free investor-intelligence community.

These days, many investors are looking to tap the growth potential of South American stocks. In fact, eight of the top 50 rated stocks in the CAPS universe hail from Argentina, Chile, or Brazil.

Spring has sprung
Brazilian and Chilean markets remained hot over their winter months and have risen 67% and 32%, respectively (in U.S. dollar terms), so far this year. Now that spring has arrived in the Southern Hemisphere, investors are hoping for an even warmer fourth quarter.

Not all the hot companies on the continent made the above cut. For instance, Companhia de Bebidas Das Americas (AMBEV) (NYSE: ABV  ) , a Brazilian brewer along the same lines as Anheuser-Busch (NYSE: BUD  ) or Molson Coors (NYSE: TAP  ) , has risen 67% this year, following a 28% gain in 2006. Another example is one of the largest companies in the region, CPFL Energia (NYSE: CPL  ) , which has continued to grow. It has returned 62% year to date.

However, Brazilian steel and iron producer Gerdau (NYSE: GGB  ) definitely made the grade as the highest-rated South American stock in CAPS for the second straight month. Of the 474 investors who've rated it, 471 expect the stock to beat the market going forward. Recent bullish comments on Gerdau revolve around strong management and its ability to consistently beat analyst expectations.

Here are several more of the top South American stocks right now, all of which carry CAPS' highest five-star rating.

Company

Country

Brasil Telecom Participacoes

Brazil

Banco Bradesco

Brazil

A.F.P. Provida

Chile

MetroGAS S.A.

Argentina

Vivo Participacoes

Brazil

Data from Motley Fool CAPS.

Please bear in mind that these are not formal recommendations. I offer them here as jumping-off points for further research.

They've got a lot of gas
What has attracted more than 147 CAPS investors to rate MetroGAS, a relatively obscure $305 million Argentinean company that trades only 6,200 shares a day on the NYSE?

Perhaps it has something to do with the fact that it's the largest natural gas distributor in Argentina (24% market share), a country The Economist believes will grow GDP by 7.7% and 5.7% in 2007 and 2008, respectively.

Or maybe it's because natural gas prices are trading higher (currently at $8.536 per mmBtu), which has consequently translated into impressive gains for the sector in recent months. The AMEX Natural Gas Index, for example, is up 20% over the past two months, led by the likes of Apache (NYSE: APA  ) and XTO Energy (NYSE: XTO  ) , and could continue to move upward if we face an especially cold winter here in the U.S.

Will MetroGAS be able to capitalize on the growing demand for natural gas in Argentina? Tell us what you think. More than 70,000 investors participating in Motley Fool CAPS are waiting to hear what you have to say.

To make your voice heard on MetroGAS, or any stock, for that matter, head on over to CAPS right now!


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