For decades, if not centuries, Britain has been home to some of the best companies -- and the best investments -- in the world. It's delivered profits to investors by air (British Airways), land (Rolls-Royce), and sea (BP).) A new report out of the country's business periodical of record, though, warns investors that the sun may finally be setting on the British Empire.
Last week, the Economist Intelligence Unit announced that if current trends hold true, Britain will cede pride of place in the global economy to Brazil sometime before the year is out. Gross domestic product for Brazil is expected to hit $2.44 trillion by year end, eclipsing Britain's own $2.1 trillion GDP. Indeed, at its current pace, Brazil is on track to eclipse each and every European nation on GDP by 2020.
What's it mean to investors?
Brazil's ascendance suggests that investors who've been putting the portion of their portfolios labeled "international" in European stocks like beleaguered BP, for example, may be behind the curve. It's time to do some forward thinking and start shifting some funds away from the tried and true, and toward countries like Brazil, which are looking shiny and new.
The simplest way to do this, of course, might be by way of investing in a broad-based, country-focused index fund such as the iShares MSCI Brazil Index
Sounds good. How can I do better?
Index investing isn't for everyone, of course. Sometimes, it's hard to know what's in there when buying an index, and there's something to be said for knowing exactly what it is you're buying with your hard-earned cash. More intrepid investors might also want to make more targeted bets. After all, if you can find the best investments in Brazil, why bother with an index fund that forces you to also buy the rest?
If investing in individual stocks is more to your test (as it is mine), then here are a few specific plays on the Brazilian economy that might pique your interest.
"Brazil's Boeing" is a superb little upstart in the aerospace sphere. Building everything from business jets, to passenger aircraft, to fighter jets, Embraer shares look like a relative bargain next to Boeing
Would you love to own a piece of ExxonMobil
Want an even better price? Then take a look at iron-ore miner Vale. Worries over near-term prospects for global steel production have this stock trading for a price that far undervalues its long-term prospects. The shares cost a mere 6.1 times earnings today, and with plenty of growth on the horizon, that valuation falls to just 5.8 if you look out to 2012 projected earnings. Vale also pays a 1.8% dividend.
I won't beat around the bush on this, Fools. If you want my opinion on the single best bargain in Brazil today, I think it's Embraer, hands-down. (That's why I own the stock.) But compared with analogous enterprises in more developed countries, each of the three Brazilian bargains I've laid out here looks attractive.
I say, if you're looking to invest internationally, there's no better time than the present. And if you're looking for the single best place to invest internationally, up-and-coming Brazil is a good place to start.
Still not sure you want to invest in individual stocks? No worries. If you're more comfortable sticking with broad-based ETFs, we've got you covered there, too. Read the Fool's new -- and free! -- report on: 3 ETFs Set to Soar During the Recovery.
We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.