What's cooking in Brazil? There's something that's strongly pulling equipment makers and construction companies there. No, they aren't going there to play soccer or let their hair down in the carnivals. They are flocking to Brazil to expand their businesses.
Over the past few months, many players in the equipment industry have made a beeline for the new hot spot. It got me wondering which companies are waving their flags in Brazil and why. Let's take a look.
Brazil's GDP growth was 7.5% in 2010, slightly lower than emerging-market superstars China (10.3%) and India (9.7%). A burgeoning middle class and low unemployment have buoyed spending in Brazil. Domestic demand continues to be robust, as is evident from the fastest monthly credit growth rate in September.
Brazil's infrastructure development got a huge boost after its government embarked on a Growth Acceleration Program (PAC 2) last year to invest largely in public works over the next few years. Throw in preparations for hosting the 2014 World Cup and 2016 Summer Olympics, and you can expect high levels of investment in infrastructure to continue.
Adding to the optimism are Brazil's investments in increasing oil production. Brazil's importance in the oil market is rising, and it is now building four diesel-powered submarines to protect its offshore oil reserves and exploration platforms.
Equally interesting is Brazil's connection with China. China is strengthening the bond with its longtime trading partner by investing $9 billion this year, thereby claiming a bigger stake in the largest South American nation.
All these factors make Brazil a very lucrative option. Its vast pool of natural resources, impressive stock market returns, and booming construction activities are solid reasons for catching investors' attention.
Who is Brazil attracting?
Equipment makers are making sure they do not miss out on the Brazilian growth story.
The best example is farm equipment giant Deere
A boom in construction activities has also attracted crane maker Manitowoc
Further proof of the enticing quality of the infrastructure boom in Brazil can be gathered from construction company Shaw's
And how could I not mention the Big Cat when it comes to any story on the emerging markets? Caterpillar
The Foolish bottom line
The way Brazil is growing, these companies seem to be on the right track. But make sure to evaluate them on all fronts, not just Brazil. Use the links below to put the companies on your free watchlist, which will help you stay up to date on the companies and the countries where they do business.
- Click here to add Deere to your stock watchlist.
- Click here to add Terex to your stock watchlist.
- Click here to add Manitowoc to your stock watchlist.
- Click here to add Paccar to your stock watchlist.
- Click here to add CNH to your stock watchlist.
- Click here to add Shaw to your stock watchlist.
- Click here to add Caterpillar to your stock watchlist.