Just a couple of days ago, Standard & Poor revised Brazil’s economic outlook from “Stable” to “Poor.” Brazilian stocks and currency are down by 7% and Brazil’s growth has been stagnant, growing by just 0.6% in the first quarter. However, the Brazilian consumer price index is at a 6.5% ceiling, which meets expectations.
The Brazilian government has stated that its focus is to fight inflation, not lackluster growth. For international investors, this presents a unique opportunity. Since Brazil one of the economic giants that will grow stronger in the years to come, its publicly listed companies on NYSE and other important exchanges of the world will offer investors with lucrative returns and investment opportunities.
Brazilian stocks are affordable yet hold great promise for the future. With this in mind, I shall discuss three little-known yet lucrative Brazilian companies listed on the New York Stock Exchange. These three companies are rarely discussed, unlike Petrobras, Vale, or Embraer, all of which are great investment options too.
Cosan Limited (USA) (NYSE:CZZ), a valuable but affordable Brazilian stock
Cosan Limited (USA) (NYSE:CZZ) is a Brazilian conglomerate producer of energy, sugar and bioethanol. In 2008, it purchased lucrative downstream fuel distribution plants from Esso. The company is one of the largest producers of alcohol and sugar in the world and has a processing capacity of 56 million tons of sugar cane per annum. In 2010, it signed a deal with Royal Dutch Shell to distribute and market not only fuels but also operate sugar and ethanol businesses.
Cosan Limited (USA) (NYSE:CZZ) trades at $18 and has a market cap of almost $5 billion. With an enterprise value of $9.3 billion, it is certainly one of the best Brazilian stocks to invest in. What’s more, it has a price-to-sales ratio of 0.33, which is way beyond what is expected to make a good investment choice. Although Cosan Limited (USA) (NYSE:CZZ) posted disappointing 4Q13 earnings, it holds a ‘buy’ rating at Zacks. With a promising future ahead, this stock will prove to be expensive to purchase in the future. At $18, it is one of the more affordable stocks to purchase today.
Exploit Brazil’s increasing smartphone usage
Telefonica Brasil SA (ADR) (NYSE:VIV), which was earlier known as Telefonica Brasil SA (ADR) (NYSE:VIV), is another great stock to purchase. It is the largest telecommunications company in Brazil and has an active user base of 76 million people. The company was formed when Portuguese Telecom and Spain’s Telefonica Brasil SA (ADR) (NYSE:VIV) sign a joint-venture and merged several Brazilian mobile phone operations. The company operates CDMA, GSM and 3G networks in Brazil.
At $25, it is not one of the most affordable Brazilian stocks to purchase. However, this stock has a bright future, as mobile communications is expanded at a breathtaking pace in Brazil. Brazilians are now one of the largest markets for smartphones and an increasing number of rural Brazilians use smartphones as their primary Internet device. This alone is reason enough to invest in Vivo, which has a market cap and enterprise value of $29 billion. With a profit margin of 12.60% and an operating margin of 20.18%, Vivo is one of the most profitable Brazilian companies listed on New York Stock Exchange.
Attractive Brazilian steelmaker sells cheap
The third Brazilian stock that has a promising future is Gerdau SA (ADR) (NYSE:GGB), headquartered in Porto Alegre. The company has a 40% stake in Spanish company Sidenor and boasts of installed capacity of more than 26 million tons of steep per annum. It mostly produces long steel for construction, industry and agricultural sectors. With steel mills in Brazil, Argentina, Dominican Republic, India, United States and a host of other countries, Gerdau SA (ADR) (NYSE:GGB) is the largest long steel producer in the Americas.
At $6, it is the one of the cheapest Brazilian stocks that can be bought today. It has a market cap of $10.31 billion and an enterprise value of $16.75 billion. With a price-to-sales ratio of 0.55, Gerdau SA (ADR) (NYSE:GGB) is an amazing investment option. Gerdau SA (ADR) (NYSE:GGB)’s products are sold on 5 continents and it is the world’s 14th largest steelmaker. China has reassured miners that it will need a lot of resources for construction, industry and agriculture sectors. This implies Gerdau SA (ADR) (NYSE:GGB) will not suffer revenue deficits for a long time to come. All indications point towards Gerdau SA (ADR) (NYSE:GGB) being one of the most attractive investment options available for the discerning investor.
Brazilian companies other than these three traded on NASDAQ or the New York Stock Exchange can be amazing investment options. The stocks are cheap right now and are selling below expectations. This situation will not always be the same, and those who purchase Brazilian stocks will gain a lot in the coming years, thanks to the country’s rising importance in all industry sectors.
The article 3 Promising Brazilian Stocks You Did Not Know About originally appeared on Fool.com.
Jaiyant Cavale has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Jaiyant is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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