Even though Brazil's economy is likely still looking at a few more rough quarters, investors are starting to come back to this beaten-up emerging market. Shares of the iShares MSCI Brazil Index (NYSEARCA:EWZ) are up 6% over the last five days, 12% over the last month, and 38% year-to-date. Brazil's utility sector has been invited along for the ride, with CEMIG (NYSE:CIG) and CPFL Energia (NYSE:CPL) modestly exceeding that performance and COPEL (NYSE:ELP) trailing slightly. Tractebel (OTCPK:TBLEY), my subject for this article, hasn't been quite as strong year-to-date (up around 27% as of this writing), but the shares have notably outperformed all of those comps (by 10% to 45%) over the past year.
While I lament that AES Tiete (TIET11.SA) (one of the best
performers of the group) is not really accessible to American investors,
Tractebel isn't a bad consolation prize. Like Tiete, CESP (OTCPK:CESDY), and CPFL Renovaveis
(which has outperformed Tractebel over the last year), Tractebel is a
pure generation company and offers investors a way to play recovering
economic growth in Brazil and higher future electricity prices. The
shares don't look like a big bargain today, and there's likely more
money to be made in riskier names more leveraged to an improving economy
and lower interest rates, but they're still a little undervalued and
maybe worth a closer look from U.S. investors.
Tractebel Offers Accessible Leverage To Future Growth In Brazil