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South America's Best Stocks

Chinese and Indian stocks? They're sooo 2006.

That's the prevailing opinion among the more than 95,000 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, eight of the top-50 rated stocks in the CAPS universe hail from Argentina, Chile, or Brazil.

New year, new winners
Last year was a good one for many South American stocks on U.S. exchanges. Among last year's winners were Gerdau (NYSE: GGB  ) and AmBev (NYSE: ABV  ) .

Despite almost every global market being down, the South American markets have held up relatively well. As of March 26, for example, Chile's market was actually up 5.4% (in dollar terms) year to date, and Brazil's and Argentina's markets were down only slightly. Names like Compania de Mina Buenaventura (NYSE: BVN  ) and Tele Norte Celular Participacoes (NYSE: TCN  ) are both up more than 15% so far in 2008.

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.




A.F.P. Provida SA (NYSE: PVD  )


Financial services

CPFL Energia (NYSE: CPL  )


Electrical utilities

Sociedad Quimica y Minera



Companhia Paranaense de Energia


Electrical utilities

Companhia de Saneamento Basico (NYSE: SBS  )


Water/sewage Utilities

Data from Motley Fool CAPS, as of April 3, 2008.

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.

You called it
Last September, CAPS investors also picked Chilean private pension administrator A.F.P. Provida as the top South American stock, and shares have since risen 9%. While that isn't a mind-blowing return, consider that the S&P 500 is down 7% over the same period.

At first glance, it appears that A.F.P. Provida's American depositary receipt shares are very lightly traded on the New York Stock Exchange, with just 30,000 in average daily volume. Consider, however, that there are 15 A.F.P. Provida domestic shares in each U.S.-listed ADR, and that volume quickly jumps to an equivalent of 450,000 shares traded per day. Nevertheless, A.F.P. Provida doesn't get much press here in the U.S., and no Wall Street analysts are covering the stock.

On the other hand, CAPS investors have been covering A.F.P. Provida since September 2006, when All-Star player indiobravo first introduced the community to the stock:

Administradora de Fondos de Pensiones Provida (PVD) is the most important private pension plan administrator in Chile. [Its] largest stockholder is Banco Bilbao Vizcaya Argentaria (BBV). As in Provida, BBV is also the owner of several other private pension plans in Latin America under such names as Horizonte and Porvenir. You will probably agree with me that Chile has the strongest economy in Latin America, and if [you] check the statistics out, will find high dividend under very low risk conditions.

A.F.P. Provida's shares are up 54% since indiobravo's first recommendation and offer a trailing-12-month dividend yield of 4.2%. CAPS players have taken notice and largely agree with his original assessment -- 136 of the 137 investors who have rated the stock believe it will outperform the S&P 500.

You can see what other CAPS investors have to say about A.F.P. Provida, or any stock for that matter, by joining CAPS today. After you've read their opinions, be sure to voice your own!

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