If you think the dollar is doomed, you aren't the only one.
My fellow Fool Tim Hanson, co-advisor for Motley Fool Global Gains, has warned of the dollar's demise for months now. So has Warren Buffett. Fortunately, neither of these guys has abandoned all hope. Even if the greenback gets a nasty case of gangrene, you still have ways to survive -- and even profit.
Your best bet may be to invest in the stocks of foreign companies that denominate revenue and earnings in stable currencies. Brazil's real is popular both with Tim and Global Gains co-advisor Nate Parmelee, and for good reason. South America's biggest country has a history of harvesting big winners that trade on American exchanges. Here's a look at the top five returners on Brazil's BOVESPA over the past year, and their corresponding returns here in the U.S.:
|
Company |
Recent Price |
CAPS Stars (out of 5) |
1-Year
|
|---|---|---|---|
|
Companhia Siderurgica Nacional |
$31.74 |
***** |
126.4% |
|
Companhia Brasileira de Distribuicao |
$59.56 |
**** |
120.3% |
|
Ultrapar Holdings |
$41.32 |
**** |
107.7% |
|
AmBev |
$89.33 |
**** |
96.1% |
|
Brazilian Telecommunications |
$16.89 |
* |
53.8% |
Sources: Motley Fool CAPS, Yahoo! Finance.
Data current as of Oct. 7.
Why your portfolio should like Brazil
Brazil was already one of the world's fastest-moving emerging markets before Friday. But on that day, the International Olympic Committee named Rio de Janeiro as the site of the 2016 Summer Olympic Games. Goodbye, Beijing; hello, Rio.
Interestingly, China and Brazil share far more than Olympic ties. The Sino superpower has been investing in the region's natural resources to insure its own energy future. For example, earlier this year, the Chinese loaned $10 billion in fresh capital to Brazil's top oil producer, Petrobras
Our 140,000-plus Motley Fool CAPS community also sees opportunity beyond Rio's sparkling beaches. Fools give four of five stars to the average Brazilian stock in CAPS, which tracks 33 issues trading on American exchanges. Usinas Siderurgicas de Minas G (OTC BB: USNZY.PK) is their top overall pick. The details:
|
Metric |
|
|---|---|
|
Business description |
Steel mill operator specializing in flat-rolled steel production. |
|
CAPS stars (out of 5) |
***** |
|
Total ratings |
61 |
|
Percent bulls |
98.4% |
|
Percent bears |
1.6% |
|
Bullish pitches |
5 out of 5 |
|
CAPS members bullish on USNZY.PK also bullish on |
Petrobras |
Data current as of Oct. 7.
The trends seem to favor Usinas. According to researcher BNamericas, Brazil's exports of flat-rolled steel products rose by 78.9% year over year in September to $234 million. India, Argentina, and Taiwan were the main importers.
But is Usinas a bargain at 17 times normalized earnings? When I asked Tim, he said:
Latin America is the region that has survived this global economic crisis best of all, and that's largely due to the continent's massive natural resource reserves (think oil, metals, food, and more). Now, with commodity prices rebounding sharply, the continent and Brazil, its largest economy, especially, stand to do even better. It's not immediately clear to me what the CAPS folks see in Usinas, but if you think Brazil will accompany economic growth with infrastructure build-out, this looks like a reasonable play.
Do you agree? Would you buy Usinas Siderurgicas de Minas at today's prices? Let us know by signing up for CAPS today. It's 100% free to participate.
More globe-trotting Foolishness:
- This is the best stock in China.
- What will your portfolio do when the world's population eclipses 10 billion?
- Ecuador doesn't much like this U.S. oil titan.
- Another reason to like Brazil: The Golden Triangle.
