24/7 Wall St. has focused on the ratings with a “positive” outlook from Standard & Poor’s, Moody’s and/or Fitch with a bias towards nations that investors can easily invest in via ADR shares, closed-end funds, and exchange-traded funds (ETFs). The featured nations that may be upgraded in 2012 are Brazil, Chile, China (with Hong Kong), Indonesia, Peru, Russia, South Korea, and Turkey.

Read: Nations Set For Credit Ratings Beyond Upgrades, Beyond The Euro Crisis

There is another slew of countries for which S&P has a “positive” outlook stance: Azerbaijan, Bolivia, Ecuador, Honduras, Latvia, Panama, and Sri Lanka. Unfortunately, these nations are almost impossible for Americans to invest in due to their size, the small number of public companies, and a lack of ETFs or mutual funds covering them.

The 24/7 Wall St. list is presented alphabetically and features relevant ratings. Also included are economic details and important developments to consider. Lastly, we have provided a list of the key closed-end funds, ETFs, and ADRs specific to each nation. Population estimates and purchasing power parity GDP for 2010 were taken from the CIA World Factbook.

In its announcement Delta said that it would replace Boeing 757s and 767s, as well as Airbus A320s with the new 737-900ER. Delta lists a total of 183 of the 757 models and 95 of the 767s in its fleet. There are also 126 Airbus 319s and 320s in Delta’s fleet.

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The new 737s use an updated version of an engine made by CFM International, a 50-50 joint venture between General Electric Co. (NYSE: GE) and France’s Snecma, part of Safran Group. Boeing ordered 200 of the engines (2 for each plane) at a list price totaling $2.2 billion.

Both Embraer and Bombardier are left hanging by Delta’s decision to purchase the Boeing jets. Embraer, especially, has been in talks with Delta to add up to 100 smaller, narrow-body jets to its fleet. A decision from Delta on the order is not expected now until sometime next year.

Delta will begin taking delivery of the new planes in the second half of 2013 and deliveries will continue into 2018. The list price for each plane is about $86 million, but Delta will receive a discount to that price.
Short-Selling Selling Gyrate
Still unsolved is whether the 737 will get a new, more efficient engine in an upgrade that would allow the plane to replace the discontinued Boeing 757 or whether Boeing will choose to design a replacement from the wheels up. Airbus has opted to put a new engine on its A320 and dubbed the new aircraft the A320neo. Delta alone owns and operates more than 300 757s, so there is still some money to be made here if the airlines decides to replace the whole 757 fleet.

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Delta shares are down about -5%, at $6.88, in a 52-week range of $6.41-$14.54. Boeing’s shares are also down, about -1%, at $61.18, in a 52-week range of $56.01-$80.65. Embraer’s shares are down about -2%, at $23.13, in a 52-week range of $20.98-$35.41. The lightly owned and lightly traded Guggenheim Airline ETF (NYSE: FAA) is also down about -1.3% just before noon at $26.81, in a 52-week range of $26.19-$43.64.

Paul Ausick

American International Group, Inc. (NYSE: AIG) Started as Buy at Deutsche Bank; Started as Equal-Weight at Barclays.
BJ’s Wholesale Club Inc. (NYSE: BJ) Cut to Equal-Weight at Barclays.
BorgWarner Inc. (NYSE: BWA) Reiterated Outperform at Wells Fargo.
CIENA Corporation (NASDAQ: CIEN) Maintained Outperform but cut target to $37 at Credit Suisse; Reiterated Buy with $30 target at Argus.
Elan Corp. plc (NYSE: ELN) Raised to Buy at UBS.
Embraer S.A. (NYSE: ERJ) Reiterated Strong Buy as Value and as Bull of the Day at Zacks.
Ferrellgas Partners (NYSE: FGP) maintained Underperform as Bear of the Day at Zacks.
3M Co. (NYSE: MMM) Started as Outperform at William Blair.
Macy’s, Inc. (NYSE: M) Raised to Overweight at Barclays.
McDonald’s Corporation (NYSE: MCD) Reiterated Outperform and raised estimates at Credit Suisse.
The Medicines Co. (NASDAQ: MDCO) Raised to Buy with $25 target at Argus.
Nasdaq OMX Group Inc. (NASDAQ: NDAQ) Raised to Buy at Stifel Nicolaus.
Research in Motion Ltd. (NASDAQ: RIMM) Cut to Hold at Citi.
Sealed Air Corporation (NYSE: SEE) Raised to Buy at Jefferies.
Texas Instruments Inc. (NYSE: TXN) Reiterated Buy but cut target to $41 at Gleacher & Co.
UnitedHealth Group, Inc. (NYSE: UNH) Reiterated Outperform and raised target to $69 at Credit Suisse.
United Technologies Corporation (NYSE: UTX) Started as Outperform at William Blair.

Apple Inc. (NASDAQ: AAPL) has reportedly been downgraded this morning by a boutique firm called First Global to a rating of “Market Perform.”

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JON C. OGG

China is expected to contribute nearly 11% of international growth and 14% of domestic growth in 2014. Whether those Chinese passengers fly on planes built in the US, Europe, China, or elsewhere will define the winners and losers among air carriers in the next few years. Aircraft makers Boeing Co. (NYSE: BA) and EADS (OTC: EADSY), maker of the Airbus family of planes, will be facing competition from a new Chinese competitor, Commercial Aircraft Corp. of China, or Comac, as well as Canada’s Bombardier Inc. (OTC: BDRBF) and possibly Brazil’s Empresa Brasileira de Aeronautica SA (NYSE: ERJ), known as Embraer.

US domestic carriers will haul 671 million passengers by 2014, which represents some growth of less than 5%. US carriers’ international traffic will reach 215 million passengers in 2014. Both are still the largest total numbers, but growth rates are not in the top five.

As China’s domestic passenger traffic increases, the country’s domestic carriers will also be growing. Air China Ltd. (OTC: AIRYY), China Southern Airlines Co. (NYSE: ZNH) and China Eastern Airlines Corp. (NYSE: CEA) are the country’s three largest airlines and are among the Chinese carriers responsible for taking about 22% of Airbus’s and 15% of Boeing’s 2010 production of A320s and 737s, respectively.

Comac late last year announced orders for 100 of its C919 passenger planes, currently scheduled for first customer deliveries in 2016. The company also said that demand for passenger planes in China would reach 4,265 new planes by 2030 and that Comac plans to sell the country’s airlines more than 2,000 of those planes.

The Comac C919 will use engines provided by a joint venture between General Electric Co. (NYSE: GE) and Safran Group, a French conglomerate. GE has also set up a joint venture with a Chinese company to manufacture avionics systems for the new plane. A list of suppliers for the C919 is available at airframer.com.

The IATA estimates that half of global airline profits, about $4.6 billion, will be made in Asia in 2010. The association also notes that the five largest airlines by market cap in 2010 are all based in Asia.

In December, the IATA characterized airline profits as “pathetic,” noting that in 2010 net margins were just 2.7%. Over the past 40 years, IATA says, airline margins come to a truly pathetic 0.1%.

The overall bleak outlook for carriers is particularly bleak for those airlines that don’t have a foothold in Asia. Established aircraft makers could be okay until Comac gets its C919 into the air, and even if that doesn’t happen by 2016, Comac will eventually put pressure on Boeing and Airbus.

GE and other component providers could do best in the Asian aircraft market. Most have established joint ventures with Chinese companies and can expect to see growth as China’s aircraft makers grow.

Paul Ausick

AllianceBernstein Holding L.P. (NYSE: AB) Cut to Neutral and $26 target at BofA/ML.
Applied Materials, Inc. (NASDAQ: AMAT) Raised target to $15 at BofA/ML.
ARM Holdings plc (NASDAQ: ARMH) Reiterated Neutral on overvaluations at BNP Paribas.
AT&T Inc. (NYSE: T) Reiterated Buy at Argus.
EMBRAER (NYSE: ERJ) Raised to Conviction Buy List at Goldman Sachs.
Hasbro Inc. (NASDAQ: HAS) Started as Buy at Jefferies.
IAC/InterActiveCorp. (NASDAQ: IACI) Cut to Neutral at Goldman Sachs.
Intel Corporation (NASDAQ: INTC) Reiterated Outperform and $28 target but raised estimates at Credit Suisse; Reiterated Buy at Argus; Maintained Buy with $27 target at Gleacher & Co.; Maintained Buy at Gabelli & Co.
KLA-Tencor Corporation (NASDAQ: KLAC) Raised target to $48 at BofA/ML.
Mattel Inc. (NASDAQ: MAT) Started as Buy at Jefferies.
Merck & Co., Inc. (NYSE: MRK) Maintained Buy on weakness at Argus.
Novellus Systems, Inc. (NASDAQ: NVLS) Raised target to $38 at BofA/ML.
Potash Corp. of Saskatchewan (NYSE: POT) Reiterated Outperform but Raised target to $189 at Credit Suisse.
Safeway Inc. (NYSE: SWY) Cut to Sell at S&P Equity Research (late-Thursday call).
TD AMERITRADE Holding Corporation (NASDAQ: AMTD) Cut to Market Perform at BMO.
Varian Semiconductor Equipment Associates Inc. (NASDAQ: VSEA) Raised to Neutral with $45 target at BofA/ML.

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JON C. OGG

The old rules did not permit an airline based in the home country of a manufacturer to qualify for export credits when buying a plane from a manufacturer from outside the country. The effect falls hardest on smaller carriers, like Ryanair Holdings plc (NASDAQ: RYAAY), which have used the export credits to reduce the financing costs of buying new aircraft.

Large carriers like Delta Air Lines Inc. (NYSE: DAL) and United Continental Holdings (NYSE: UAL) did not qualify for the credits, and have wanted the rule change for some time.

Under the new rules, export credit providers, like the US Export-Import Bank, will charge fees to those airlines that qualify for the credits that will bring the financing charges more in line with commercial rates. The fees will not rise more than 10% from quarter to quarter. Existing export financing rules will be allowed through the end of 2012.

Ryanair and other members of a group that benefited from the old rules wanted extended financing through the end of 2013. The new rules could effectively double the financing charges for these airlines.

Boeing and Airbus favored the old rules, fearing that the higher financing costs will reduce demand for their passenger planes, which would lead to production cuts. Some critics of the old rules pointed out that the export credits artificially boosted demand for new aircraft during the recent recession, when commercial credit was hard to get.

It remains to be seen what the impact on Boeing and Airbus orders will be, but a good guess would be “not much.” The large airlines should benefit from a more market-driven cost of financing. They were concerned that smaller airlines able to receive the export credits were poaching their routes. Makers of smaller jets should feel no impact, except for the certainty that comes from having an agreement. The major impact will be on carriers like Ryanair, where higher financing costs could stifle growth.

Paul Ausick

Abercrombie & Fitch Co. (NYSE: ANF) Added to Goldman Sachs Conviction Buy List.
Air Products & Chemicals Inc. (NYSE: APD) Reiterated Buy and raised target to $105 at Jefferies.
Amazon.com Inc. (NASDAQ: AMZN) Reiterated Neutral but Raised Target to $165 at Credit Suisse.
Arch Capital Group (NASDAQ: ACGL) Cut to Underweight at JPMorgan.
Buffalo Wild Wings Inc. (NASDAQ: BWLD) Raised to Strong Buy at Raymond James.
Cisco Systems Inc. (NASDAQ: CSCO) Raised to Outperform at Oppenheimer.
Corning Inc. (NYSE: GLW) Reiterated Buy with $24 target at BofA/ML.
Elan Corp. plc (NYSE: ELN) Raised to Buy at UBS.
EMBRAER (NYSE: ERJ) Started as Buy at Goldman Sachs.
Hess Corporation (NYSE: HES) Raised to Market Weight and $80 target at Credit Suisse.
Jacobs Engineering Group Inc. (NYSE: JEC) Raised to Buy at Canaccord.
Leap Wireless International Inc. (NASDAQ: LEAP) Cut to Hold at Auriga.
Motorola Inc. (NYSE: MOT) Reiterated Buy at BofA/ML.
OGE Energy Corporation (NYSE: OGE) Started as Outperform at Wells Fargo.
Royal Bank of Canada (NYSE: RY) Cut to Market Perform at KBW.
Sandridge Energy, Inc. (NYSE: SD) Raised to Buy at Stifel Nicolaus.
Wimm-Bill-Dan (NYSE: WBD) Raised to Neutral at Goldman Sachs.

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JON C. OGG

Comac was founded just two years ago and these are the first orders for its C919 passenger plane. The question, of course, is how big a threat Comac will become to industry leaders Boeing Co. (NYSE: BA) and Europe’s EADS (OTC: EADSY), owner of the Airbus line.
Orders for the new planes came from General Electric Co.’s (NYSE: GE) leasing group and China’s three largest airlines: Air China Ltd. (OTC: AIRYY), China Southern Airlines Co. (NYSE: ZNH), and China Eastern Airlines Corp. (NYSE: CEA). Two other Chinese companies also ordered planes.
The C919 is scheduled for its first flight to take place in 2014, with deliveries following in 2016. The plane carries 166 passengers, and is expected to compete with Boeing’s 737 and the Airbus A320, according to Bloomberg.
Comac noted that China will need to buy 4,265 new passenger planes by 2030 in a domestic market that could be worth $480 billion. Comac said it expects to sell in excess of 2,000 C919s over the next 20 years.
Chinese air carriers expect to receive 112 Airbus planes this year and 71 Boeing planes, representing some 22% of Airbus’s total production and 15% of Boeing’s. Airbus received an order for 102 planes from Chinese companies earlier this month, including 50 A320s. Boeing has said it has 737 plane orders from Chinese airlines this year.
Canada’s Bombardier Inc. (OTC: BDRBF) plans to deliver a similar-sized plane in 2013, and Brazil’s Empresa Brasileira de Aeronautica SA, known as Embraer (NYSE: ERJ) is considering entering the market as well.
Both Boeing and Airbus say they welcome the competition, but that’s probably because they reckon that it will take Comac at least twice as long to deliver the planes as the company now plans. After all, that’s how Boeing and Airbus do it.
Paul Ausick

Outside of the ETF investing, this story becomes one where stocks may still have great growth prospects.  But if you are a value investor or one who does not like to chase stocks when they are close to yearly or all-time highs, then there is a problem.  So many of these stocks are hitting highs or are so close that you have to wonder just how much upside is there.  Using 52-week highs and all-time highs is of course not the only metric for valuations, but you might be surprised as you read through a summary of the major Brazilian stock performances on Friday alone.  Throw in the Brazilian Real currency versus the US Dollar component as these are all ADRs and it adds in yet another element.

Banco Bradesco S.A. (NYSE: BBD) is the huge Brazilian bank and its shares rose 1.8% at $19.94, with a 52-week trading range of $7.40 to $20.20 and an all-time high north of $24.00.

Brasil Telecom Participacoes S.A (NYSE: BRP) is a telecom player in Brazil and its shares rose 2.9% to $52.33, with a 52-week trading range of $22.00 to $53.49 with highs in 2007 and 2008 hitting north of $80.00.

Brasil Telecom S.A. (NYSE: BTM) is a telecommunications services provider whose shares rose 3.3% to $26.28 and its 52-week trading range is $9.49 to $26.55 and it was in the mid-$30′s in early 2008.

Braskem S.A. (NYSE: BAK), an integrated petrochemical cracker and thermoplastics producer, rose 0.66% to $12.28 and its 52-week trading range is $3.64 to $13.06, with all-time highs hitting north of $25 back in 2004.

BRF – Brasil Foods S.A. (NYSE: PDA), a poultry, pork, beef cuts, milk, dairy products, and processed food producer, was up 0.8% at $51.50.  Its 52-week trading range is $20.86 to $54.83 and its all-time high was barely north of $60 in early-2008.

Centrais Electricas Brasileiras S.A. (NYSE: EBR), the electric power producer, rose over 3% to $15.43.  Its 52-week trading range is $9.21 to $16.76 and data only goes back under one-year since its IPO.

Companhia de Bebidas Das Americas (NYSE: ABV), or AMBEV, in the beer, draft beer, malt, carbonated soft drinks, and other non-alcoholic space, rose 1.1% to $84.16.  Its 52-week trading range is $30.06 to $84.41 and this is effectively at all-time highs.

Companhia Paranaense de Energia (NYSE: ELP), or COPEL, the electric producer, rose 1.3% to $17.56 and its 52-week trading range is $7.80 to $17.71.  It came within a penny of a 52-week high during Friday’s session and briefly traded north of $20.00 in 2008.

Companhia Siderurgica Nacional (NYSE: SID), the integrated steel producer, rose 2.1% to $30.10 and the 52-week trading range is $7.87 to $31.06 and the high after its early 2008 trading was right at $50.00.

CPFL Energia S.A. (NYSE: CPL), an electric energy producer, rose 1.6% to $54.15 and its 52-week trading range is $34.93 to $57.59 and its all-time highs were over $75.00 in mid-2008.

EMBRAER (NYSE: ERJ), the Brazilian airplane manufacturer, rose 1.3% to $22.57.  Its 52-week trading range is $9.27 to $26.53 and its all-time high was just over $50.00 in mid-to-late 2007.

Gafisa S.A. (NYSE: GFA), the huge Brazilian homebuilder backed by billionaire Sam Zell, rose 5.9% to $30.18… 52-week range is $5.33 to $33.09, all-time highs over $40.00 in the last two-years.

Gerdau S.A. (NYSE: GGB), in the production and sale of steel products, was one of the biggest winners as it rose 4.8% to $13.44. Its 52-week trading range is $4.18 to $14.01 and it was north of $25.00 in mid-2008.

GOL GOL “>Linhas Aéreas Inteligentes S.A. (NYSE: GOL) was somewhat surprising that it was not up more.  The Brazilian airline carrier rose 3.5% to $10.25 and its 52-week trading range was $2.78 to $11.53, yet its all-time high back in 2006 was very briefly over $40.00.

Itaú Unibanco Holding SA (NYSE: ITUB), the credit and financial services giant, rose 0.75% to $20.17 and its 52-week high is $20.50.  All-time highs were hit in 2008 in the mid-$20′s.

NET Servicos de Comunicacao S.A (NASDAQ: NETC), a cable TV player, rose 3% to $12.11.  Its 52-week trading range was lifter Friday to $3.88 to $12.27.  Its all-time high appears to be exponentially higher back in the bubble days but more recently this was a $15.00 to $17.00 stock during 2007.

Petroleo Brasileiro (NYSE: PBR), or PETROBRAS, the giant integrated oil player, is going to trade independently from any Olympics plays even if it is the giant of giants.  Shares were up 0.6% at $44.72 and the 52-week trading range is $14.73 to $46.52.  This was north of $70 back when oil was soaring north of $100.00.

TAM S.A. (NYSE: TAM), the passenger and cargo air transportation services carrier, rose 4.6% to $13.44.  Its 52-week trading range is $5.27 to $19.20 and its highs in 2007 were in the mid-$30′s.

Tele Norte Leste Participacoes S.A. (NYSE: TNE), a telecom player, rose 0.77% to $18.27.  Its 52-week trading range is $10.17 to $21.98. Its highs in early 2008 were north of $26.00.

Telecomunicacoes de Sao Paulo S.A. (NYSE: TSP), or TELESP, a fixed-line telecom player, rose 1.2% to $24.74 and its 52-week trading range is $16.75 to $26.11.

VALE S.A. (NYSE: VALE), or the Companhia Vale do Rio Doce, the diversified metals and mining operator, rose 2.8% to $22.92.  Its 52-week trading range is $8.80 to $23.58 and it traded north of $40 briefly in 2008 when commodities were soaring.

Vivo Participacoes S.A. (NYSE: VIV), a wireless telecom player, rose a sharp 5% to $26.18.  Its 52-week trading range was lifter Friday to $7.76 to $26.44.  Its highs all the back to 2000 were north of $200 briefly and more recently in 2008 it nearly reached $30.00.

Votorantim Celulose e Papel S.A. (NYSE: VCP), a pulp and paper player, rose 2% to $15.94.  Its 52-week trading range is $3.53 to $17.46 and was north of $30 in late-2007 and early-2008.

The world recession did not kill the Brazilian economy as it did elsewhere.  It is effectively energy independent, has favorable business practices for a Latin American country, and has an economy where the middle class still has much perceived upside.  And lifting up the lower-class still offers much room for growth.  If these stocks are truly reflective of the future growth, then the old adage “Brazil is the most promising emerging market out there, and that is the best it will ever be” may be history.  If the bull has life into 2010, it should continue to support Brazil and most BRIC-investment countries.

And if these moves prove to all be too far and too fast, then these are at significant premiums on a relative basis as there many domestic leadership stocks still well under their highs of the last year and longer.  Many investors tried to make the same investment hopes in China in 2008, and many of those bets are still very far under water as the markets dealt with the aftermath of the recession.

Brazil’s estimates population is already almost 200 million, and it has a young population.  The CIA World Factbook shows 66.8% of its population in the 15 to 64 category and 26.7% in the 0 to 14 category, with only 6.4% of its people 65 or older.  Its approximate 2008 GDP was $1.93 trillion, or $1.573 trillion estimated at the official exchange rates.  But the same CIA World Factbook also shows some 31% of the population lived under the poverty line as of 2005.

We actually see much value in some of the neighboring countries, which we plan on comparing for valuation in the coming week.  Keep an eye out for that from us.

JON C. OGG

Jon C. Ogg
August 15, 2007