Brazil has been mired in a deep recession over the past couple of years due to slumping commodity prices. Compounding the country's economic problems was a political scandal that led to the impeachment of its president. However, thanks to a combination of improving commodity prices and the pro-growth policies of new President Michel Temer, Brazil's economy appears to be on an upswing.

While recent reports of Temer's possible involvement in the corruption scandal have rocked Brazilian stocks, the market's sell-off could be a buying opportunity for investors with an iron stomach and a long-term mind-set. That's because they can still pick up shares of two of the country's top companies, iron ore giant Vale (NYSE:VALE) and oil giant Petrobras (NYSE:PBR), at a compelling prices since both are still down more than 50% over the past five years. While both companies have issues to overcome, they could be big winners in the years ahead if commodity prices continue improving.

Brazilian man holding the flag.

Image source: Getty Images.

Meanwhile, for more risk-averse investors, an attractive way to invest in Brazil is through Brookfield Infrastructure Partners (NYSE:BIP). The global infrastructure giant has taken advantage of the country's economic weakness to scoop up top-tier assets at excellent prices, which should deliver steady income growth for the company and its investors in the years ahead.

Here's a closer look at why investors might want to consider investing these Brazil-focused stocks this year.

The low-cost iron ore leader

Vale is not only the global leader in iron ore and nickel production, but it also produces fertilizer, coal, and copper. Iron ore, however, is its bread-and-butter business, which has been both a blessing and a curse because prices have been excruciatingly volatile over the past few years. For example, in the past year alone, prices had risen nearly 75% at one point before falling back to where they started. Driving that volatility is China's steel industry, which seems to go into fits and starts these days on a whim.

What makes Vale such an attractive investment today is its recently completed S11D mine, which is the biggest mine ever built. While the $14.3 billion project started production last year, it won't reach its full capacity of 90 million tonnes until next year. Once it does, it should be the lowest-cost iron ore mine in the world, with its cash costs expected to be 40% less than the company's existing mines. That'll help Vale better weather the volatility of iron ore prices while enabling it to cash in when prices rise.

While that mine is a compelling catalyst for investors, Vale isn't without its issues. Among the most concerning are the costs associated with a ruptured containment system for the Samarco mine, which it co-owns with BHP Billiton (NYSE:BHP). While the mining companies reached a $6 billion legal settlement with Brazil, there are more than $42 billion of additional claims to settle, which could weigh on the stock for quite some time. For investors looking for plenty of upside potential from a Brazilian stock, though, Vale has that in spades if iron ore prices catch fire again.

The improving oil giant

Petrobras was at the center of Brazil's corruption scandal, which couldn't have come at a worse time for the company because it was battling crashing crude prices. That put tremendous pressure on its balance sheet because it has the most debt in the entire oil industry.

That said, the company has made tremendous progress over the past year to right the ship. It slashed expenses, including a 32% reduction in capex and a 20% workforce reduction, to improve cash flow. In the meantime, it has sold several assets to trim debt, including a natural gas pipeline system to Brookfield Infrastructure Partners, which has pushed debt below $100 billion. Finally, it has reduced its five-year spending outlook down to what it believes is an affordable plan that should still enable it to grow oil output 33% by 2021. Because of that, Petrobras has the potential to be a big winner if crude prices cooperate.

A floating oil production platform.

Image source: Getty Images.

A lower-risk bet on Brazil

Brazil's economic and political woes scared most investors out of the country. However, that's the type of situation that value-focused Brookfield Infrastructure Partners looks for because it can buy high-quality assets for a reasonable value. That's just what it has done over the past year, completing several strategic acquisitions to build its operating presence in the country, which already included a network of toll roads and a rail logistics business it co-owns with Vale and other investors. 

The largest deal was leading a consortium to acquire a 90% stake in a natural gas transmission business from Petrobras for $5.2 billion, with Brookfield Infrastructure Partners investing $1.3 billion in the deal. The draw is that 100% of the volumes are under long-term ship-or-pay agreements that escalate with inflation. Because of that, the company can earn equity-like returns with bond like risk. It's an asset that would have never become available if it wasn't for Petrobras' financial troubles.

In addition to that deal, the company expects to invest $300 million over the next five years to develop electricity transmission lines in the country after winning 30-year concessions from the government. Those agreements will provide the company with a growing stream of stable cash flow as the lines enter service. Finally, the company increased its ownership interest in its Brazilian toll roads last year and recently won a 30-year concession by the government to expand the network, which will earn it solid risk-adjusted returns over the life of the agreement. 

These acquisitions and growth initiatives in Brazil will be a key driver of Brookfield Infrastructure Partners' growth in 2017 and beyond. Overall, the company expects funds flow from operations to grow 6%-9% annually, positioning it to increase its distribution to investors by 5% to 9% per year. That visible earnings growth should fuel double-digit total returns over the long term, making it a less risky way to gain some meaningful exposure to Brazil.

Investor takeaway

Brazil has proven to be a challenging place for investors over the years because its economy is highly sensitive to commodity price fluctuations. With prices on the upswing, though, now could be an excellent time to invest in its top commodity producers, Vale and Petrobras, because they could rebound sharply in an improving market environment. But for investors seeking a less risky way to invest in the country, Brookfield Infrastructure Partners is a top idea because it focuses on buying assets on a value basis that have secure long-term cash flows in place, which helps insulate it from the country's economic issues.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.