Cramer's Grooming Tip: Get A Brazilian (PBR, RIO, AMX, GFA, MELI, GOL, EWZ)

This week on MAD MONEY on CNBC, Jim Cramer had some international advice.  He wants portfolios to have Brazilians, but not the waxing type.  He has an oil play, a metals and mining play, a Latin American telecom play, and even a housing play.  Below are his picks and some of the stats for the stocks, and we followed up with some other recent Cramer picks for Brazil or Latin America and even threw in the more diversified ETF’s:

  • Petroleo Brasileiro (NYSE: PBR), or PetroBras, is Brazil’s integrated oil play that has quietly become one of the larger oil stocks with a $244 Billion market cap. At $111+, it spent much of this last week roughly 10% off of highs, and its 52-week trading range is $41.38 to $119.16.  This is also one of Ken Heebner’s long-term favorites in the sector.
  • Companhia Vale do Rio Doce (NYSE: RIO) is a diversified metals and mining company that operates globally, and its market cap is $146.6 Billion as of now.  At $30.35, its is nestled between its 52-week trading range of $15.57 to $38.32. 
  • Another of his picks for Brazil was actually the Mexico-based America Movil S.A.B. de C.V. (NYSE: AMX) as the wireless and fixed telecom play for all of Latin America.  This is a Carlos Slim entity, and its market cap is now $102 Billion.  This had roughly 150 million subscribers throughout Latin America.  Not bad for a company whose origins go all the way back to 2000, wait only 8-years?  On a split-adjusted basis this is still up 10-fold since coming public in February 2001.
  • The last Cramer pick in Brazil was homebuilder Gafisa S.A. (NYSE: GFA).  At $30.85 this market cap is only about $4 Billion, small for picks this week, and shares are nestled in a $20.67 to $42.74 range of the last year.  This one has barely been public for a year, and we had previously noted how this was Sam Zell’s investment down in Brazil. Apparently Brazil’s housing market growth is not yet having the same issues of over-inflated prices with poor overextended borrowers like in the U.S.  Hopefully they know to look north and now see what problems to avoid.

Another recent Cramer pick on Latin America was the individual and corporate e-commerce platform provider MercadoLibre (NASDAQ: MELI), although this one was battered and deep fried in recent weeks and we recently questioned whether or not you should buy the stock since it tapped the secondary markets this soon.  It is based in Argentina, but also has ‘clientes’ in Brazil and elsewhere in Latin America.  In the past Cramer also noted GOL as the airline of choice for Brazil.

We know that Cramer would rather have a diversified portfolio of roughly five large stocks at any time rather than mutual funds, but there are many diversified ways to play the Brazilian stock market without having to choose one of the individual stocks.  If investors want to diversify via ETF’s, there is always the iShares MSCI Brazil Index (NYSE: EWZ).  It closed at $75.11 Friday and its 52-week trading range is $39.80 to $87.67.

A way to partially play Brazil with more diversification is also the SPDR S&P BRIC 40 (AMEX: BIK), although as a “BRIC” play you have to understand that this is more geographically diversified as Brazil, Russia, India, and China. The iShares also has a similar one called the iShares MSCI BRIC Index (NYSE: BKF), and Claymore has the Claymore/BNY BRIC (AMEX: EEB).

Jon C. Ogg
February 9, 2008

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