Chinese and Indian stocks? They're sooo 2006.

That's the prevailing opinion among the more than 85,000 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, five of the top 50 rated stocks in the CAPS universe hail from Argentina, Chile, or Brazil.

Feliz ano novo
Last year was a good one for many South American stocks on U.S. exchanges. Among last year's winners were Credicorp (NYSE: BAP) and  Brasil Telecom Participacoes (NYSE: BRP).

Of course, not all South American stocks surged in 2007. Like many U.S. banks -- such as Citigroup (NYSE: C) and Wachovia (NYSE: WB) -- some South American financials like Banco Macro also struggled with the global credit mess.

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.

Company

Country

Industry

Companhia Paranaense de Energia (NYSE: ELP)

Brazil

Electric utilities

Sociedad Quimica y Minera

Chile

Basic materials

A.F.P. Provida SA

Chile

Financial services

CPFL Energia

Brazil

Electrical utilities

Brasil Telecom SA (NYSE: BTM)

Brazil

Telecommunications

Data from Motley Fool CAPS, as of Feb. 29, 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.

Greetings from southern Brazil
This month's top South American stock, Companhia Paranaense de Energia (Copel), is based in the southern Brazilian state of Parana, near the borders of Argentina and Paraguay. Its business is mainly "power generation, transmission, and distribution of energy within the state of Parana," but it also has its hands in telecommunications and provides consulting services across South America.

Copel is majority-owned by the state of Parana, and also happens to be the largest company in the state, with 3.38 million customers. In fact, only 13.5% of its common shares are "free floating" and in the hands of the general public. Most of the rest is held by BNDESPAR, a Brazilian venture capital firm.

Over on CAPS, fully 271 of the 273 investors who have rated Copel believe the stock will outperform the S&P 500 going forward. One of these bulls is the Fool's own TMFDiogenes, who recently had this to say about Copel:

Severely cheap socially conscious electric utility in growing Brazilian economy. Though it's grown profits 10%-20% for the past few years, the stock's trading for only 7 times trailing earnings (as compared to 17 times for industry peers) ... The company has strong margins (49% gross, 27% operating) and return on equity (17%), which have for the most part been steadily improving over the past few years.

With Copel shares nearly 20% off their July 2007 highs, CAPS investors believe the stock continues to be poised for growth. In addition, income-minded investors may be salivating in anticipation of Copel's annual dividend payment, which is paid each April. According to the company's dividend policy, "We are required to distribute as dividends an aggregate amount ... equal to at least 25% of Adjusted Net Profit." The 2007 annual figures have yet to be released, but last year's payment amounted to $0.524 per American depositary share. 

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

The Motley Fool Global Gains team recently returned from visiting companies in South America. To read their full reports, a free trial to the service is yours. Just click here to get started.

Fool contributor Todd Wenning, ranked 430 out of 85,000 CAPS players, speaks broken Spanish. He does not own shares of any company mentioned. The Fool has a disclosure policy.