South America's Best Stocks

Chinese and Indian stocks? They're sooo 2006.

That's the prevailing opinion among the more than 83,000 investors participating in Motley Fool CAPS, the Fool's free investor-intelligence community.

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

Feliz ano novo
Last year, 2007, was a good one for many South American stocks on U.S. exchanges. Among last year's winners were Companhia de Minas Buenaventura (NYSE: BVN  ) and Petrobras.  

Of course, not all South American stocks surged in 2007. Like many U.S. banks, financials like Banco Macro (NYSE: BMA  ) struggled with the global credit mess.

While the Argentinean, Brazilian, and Chilean economies are expected to maintain strong growth in 2008, this doesn't necessarily mean that the region's stock markets will keep pace. But never fear -- CAPS investors are here to help you find quality stocks worth researching.

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

Company

Country

Industry

Sociedad Quimica y Minera (NYSE:SQM)

Chile

Chemicals

A.F.P. Provida

Chile

Pension fund mgmt.

IRSA Inversiones Representaciones (NYSE:IRS)

Argentina

Real estate development

CPFL Energia

Brazil

Electrical utility

Companhia de Saneamento Basico

Brazil

Water utility

Data from Motley Fool CAPS.

Please bear in mind that these stocks are not formal recommendations. Instead, they're offered as jumping-off points for further research. Researching five-star CAPS stocks has proven to be an effective tool for investors.

Bringing South America to you
The Fool was so intrigued by investment opportunities in South America, we recently sent members of our Motley Fool Global Gains team to Argentina, Brazil, and Chile to meet with local companies and get a better understanding of investing opportunities in the region. Among the companies they visited were MercadoLibre (Nasdaq: MELI  ) , the eBay of South America, and Cresud, an Argentinean farm products manufacturer -- essentially a smaller version of farm giants like Archer Daniels Midland (NYSE: ADM  ) and Bunge (NYSE: BG  ) here in the U.S.

The team also visited one of this month's top South American stocks: Argentinean real estate developer IRSA Inversiones Representaciones.

Opportunity and potential abound for IRSA, Argentina's largest and most well-diversified real estate company. Having such a strong position in an economy that's growing at a 6%-7% clip, along with a growing middle class and increasing political stability, is very intriguing indeed.

Fool analyst Tim Hanson made the trek below the equator with the Global Gains team and had this to say about IRSA on CAPS:

Very impressive once you go to Buenos Aires and see what they own. That's 4 of the top 5 malls and the only piece of undeveloped land left in Puerto Madero. Value should skyrocket as long as interest rates remain calm in Argentina and banks start doing a little bit of lending.

Over on CAPS, Tim isn't the only Fool who's bullish on IRSA. Of the 122 players who have rated the stocks, fully 121 believe it will outperform the U.S. market going forward.

You can see what CAPS investors have to say about MercadoLibre, Cresud, and IRSA, or consider a free 30-day trial to Motley Fool Global Gains to see what the team learned from visiting these companies.


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