Brazilian Bets

08/01/2013 10:00 am EST


Rudy Martin

Editor, Investing Insight

With everything known about Brazil's problems already reflected in depressed values of that nation's stocks, prices have been edging higher, observes Rudy Martin in Latin Stock Investing.

Increased investor attention to Latin America's biggest economy calls for some added Brazilian representation in our Model Portfolio.

We are buying Banco Santander (Brasil) S.A. (BSBR) to gain broad additional exposure to the Brazilian.

BSBR offers a full-service range of financial services, including individual and corporate banking. We also hope to benefit from the stock's 7.2% current indicated dividend yield.

In addition, we recommend buying shares in Brazilian energy giant Petroleo Brasileiro Petrobras S.A. (PBR.A).

Despite a gradual rise in crude oil prices, problems with Brazil's economy, compounded by obstacles in Petrobras's scramble to finance significant on-shore and off-shore hydrocarbon discoveries, have ganged up to erode PBR.A's stock price this year.

But with all the firm's challenges now fully reflected in its stock price, over a base-building period over the past month, the time seems right for the stock to start to make up ground it has lost to the other international integrated petroleum stocks.

To secure funds do develop its known hydrocarbon deposits, Petrobras is planning to sell up to $10 billion in assets this year.

We believe it is time for a major international energy firm to be added to the portfolio. The shares, which have recently been changing hands at a conservative 10.1 times earnings, has been added to our Global Blue Chip Portfolio.

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