Carnival has come and gone, but don't tell investors in Brazilian steel behemoth Companhia Siderurgica Nacional (NYSE: SID). 

Shareholders of CSN danced their way to more than 200% returns in 2007, and the company's year-end earnings release is pounding a bullish beat on a steel drum.

Net income for 2007 rose by 150% to a record $1.7 billion on wider margins and 27% higher net revenue. The company, which holds 34% of the Brazilian steel market and pulls 67% of its revenues from its home country, continues to benefit from the strong demands of Brazil's growing economy.

Beyond riding the wave of global construction, the secret to this company's continued success lies in a most cunning strategy for vertical integration and synergy between its multiple subsidiaries.  Emulating the model of the Carnegie Steel Co., which later became part of U.S. Steel (NYSE: X), CSN mines its own iron ore and other ingredients necessary for steel production.

CSN resides in Brazil, home to the world's largest producer of iron ore, Vale (NYSE: RIO), and massive iron ore deposits. It's no surprise that CSN was able to take the Carnegie example one step further and, with iron ore prices soaring, look to use iron ore production as not just a competitive advantage but also as a source of profits.

Similarly, the company is positioning itself as a low-cost producer of cement and captures gas from the distillation of coal to produce a suite of chemicals. Throw in some rail lines and hydroelectric plants, and you have the makings of a very sophisticated industrial conglomerate poised to grow in lock-step with the burgeoning Brazilian economy.

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