These Stocks Beat Gold Stocks

With the price of gold breaking a record $1,000 per ounce this month, investors have made plenty of profits in stocks connected to the exploration and production of this precious metal. But I've found investments from another sector that are beating the pants off gold stocks ... and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,500 stocks rated by our Motley Fool CAPS community members include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the "Gold" tag pulls up 84 stocks with an impressive average return of 14.6% in the past year.

But CAPS tags can lead you to stocks that have far outpaced the returns from the gold group: Those tagged "Brazil." These 31 companies have more than doubled the returns of the gold group, with a 40.8% gain in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource for zeroing in on potential opportunities in each area.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on the company, and why.

For instance, here are a few of the stocks in the gold group:

Company

CAPS Rating (Out of 5)

1-Year Performance

Newmont Mining (NYSE:NEM)

***

7%

Goldcorp (NYSE:GG)

****

55%

Gold Fields (NYSE:GFI)

***

(21%)

Agnico-Eagle Mines (NYSE:AEM)

***

79%

Sources: Google Finance and Motley Fool CAPS, as of March 24.

Now, here's a sampling of Brazilian stocks that investors may want to consider, judging by interest in the CAPS community:

Company

CAPS Rating

1-Year Performance

Petrobras (NYSE:PBR)

*****

106%

Sadia S.A. (NYSE:SDA)

*****

62%

Vivo Participacoes (NYSE:VIV)

*****

64%

Tele Norte Leste Participacoes

*****

79%

Sources: Google Finance and Motley Fool CAPS, as of March 24.

The chicken dance
I'm sure when investors think about grabbing on to the next great stock, nabbing the outstanding potential of poultry processors isn't likely the first thought on their mind -- let alone a pullet purveyor from Brazil. But Motley Fool Hidden Gems recommendation Sadia has already outpaced the returns of many stocks from more attractive industries, with shares rising more than 20-fold in the past five years.

The dramatic run in the stock of the chicken, pork and processed-foods producer results from solid 15% top-line growth, and international expansion into more profitable segments that improved net income by 19% annually over those same five years. Increasing sales and margins have not only made Sadia one of Brazil's best stocks, but one of the best international stocks overall.

Interestingly, Sadia's business has expanded significantly, with no help from the U.S. and actually little help from the Americas as a whole. Each of its international export segments -- Europe, Middle East, Asia and Eurasia -- reported higher overall revenue and growth in sales than exports to the Americas in the last two years. The company has also put its main focus on its processed products segment, which brings higher profitability.

While the price of gold is intimately tied to the state of the U.S. and world economies, the relative stability of food products makes companies like Sadia a favorite defensive play for investors. CAPS investors like Sadia's sound balance sheet and reasonable valuation, too, with more than 98% of the 953 investors rating the company believing it will outpace the S&P in the future.

Before you buy ...
Of course, past events alone can't determine where investors should be placing capital now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify trends that may significantly affect your investments' performance. Just make sure to do your own due diligence, rather than simply following crowds or individual recommendations.


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