As I’ve mentioned in previous briefings, I have been avoiding the adding Brazilian electric utilities on concerns about pending rate changes.

However, I’m seeing a bombshell buying opportunity in one of my favorite utility stocks. And now is the right time to illuminate your portfolio with a name that I believe can provide a nice, quick gain.

Brazil is forcing power utilities to cut rates that manufacturers say are the fourth-highest in the world in a bid to make manufacturers more competitive and control inflation.

The country’s president, Dilma Rousseff, said this week that local businesses could see their electricity bills fall by more than the 28% previously announced as part of her plan to renew existing licenses of power companies.

So in response to all this, the Brazilian utility sector stocks headed for the floor in a massive one-day correction on Wednesday. And this is presenting us with a tremendous buying opportunity that we shouldn’t miss.

Read more in the attached weekly update about my favorite utility value plays in emerging markets.

Happy trading this week!

Rudy

Top Stocks mentioned this week:
• Companhia Siderurgica Nacional S.A. (NYSE:SID) +21.3%
• Grupo Financiero Galicia S.A. (NasdaqSC:GGAL) +16.4%
• Braskem (NYSE:BAK) +15.5%
• Fibria (NYSE:FBR) +15.0%
• Desarrolladora Homex S.A. de C.V. (NYSE:HXM) +14.4%
• Data date: 9/14/12

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Heightened uncertainty caused by the European debt crisis,the slowdown in the Chinese economy and the possibility of new initiatives by the U.S. Federal Reserve have resulted in elevated cash positions in the Latin Stock Investing Model Growth Stock Portfolio and the LSI Model Dividend Stock Portfolio. When indications emerge as to how the resolutions to these issues will impact securities markets, appropriate modifications will be made to the LSI Model Stock Portfolios.

Of the securities that remain in the portfolios, the 5.08% position of Administradora de Fondos de Pensiones Provida SA (NYSE:PVD – ‘AFP Provida’) in the LSI Model Dividend Stock Portfolio is being closely monitored. Indications are that the firm is possibly “in play” as a merger prospect.

The Wall Street Journal reported last week that Mexico's Grupo Financiero Banorte SAB “might be interested in acquiring some of Banco Bilbao Vizcaya Argentaria SA's (NYSE:BBVA) Latin American pension and retirement businesses if the price were right.”

BBVA, according to the Journal report, has been looking to sell its 51.6% interest in PVD, which reportedly controls a 15% market share of the pension administration business in Mexico. The firm also does pension management and administration business in Peru and and Ecuador.

Mexico’s Grupo Financiero Banorte SAB may not end up with PVD for a number of reasons. These include a statutory cap of 20% that any firm can control the pension management business in Mexico, where a unit of Grupo Financiero Banorte already has a reported share of 13%. In addition, the Mexican banking firm might not have ambitions for pension management in the other countries where PVD does business.

But it frequently turns out that when an owner is motivated to sell a business (and the troubled BBVA has plenty or worries in its home country of Spain) and at least one party starts to show some interest, a deal eventually evolves, even if a different buyer emerges.

With its established position in a relatively stable industry serving multiple nations in a region experiencing economic growth, PVD makes an intriguing target for an acquisition.

Recently priced at less than 11 times trailing earnings and with an indicated dividend yield of 7.7%, the firm represents a solid play on Latin American economic growth.

Read more about this in the attached weekly update and ...

Happy trading this week!

Rudy

These are some of the best performing stocks mentioned this week:
• Companhia Siderurgica Nacional S.A. (NYSE:SID) +16.0%
• Braskem (NYSE:BAK) +13.7%
• Telefonica S.A. (NYSE: TEF) +13.2%
• Rio Tinto plc (NYSE:RIO) +11.0%
• Vale S.A. (NYSE:VALE) +10.1%
• Data date: 9/7/12

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Here is the weekly update for August 6th if you have not already downloaded it.

Optimism over future conditions has not evaporated among business people in some major Latin American nations. According to a report "International Business Report 2012" by Grant Thornton International, business people in Peru, Brazil and Chile harbor high degrees of optimism for the future. The firm's survey of Peru business people found that with a net 78% (those who responded as optimistic minus those who said they were pessimistic) were optimistic about the business outlook.

That tied with the nation of Georgia with the highest scores of net optimism. The net score of 74% for business people in Brazil placed it in third place of the nations surveyed, just behind Georgia and Peru. With a net 52% of business people surveyed classified as optimistic, Chile—with the eighth most enthusiastic business people in the world--made the list of the world's top 10 nations as measured by net optimism of its business populace.

Count me as an optimist!

Just after President Obama (following years of delays) finally signed free-trade agreements with Mexico and Colombia, I added a position in the Global X InterBolsa FTSE Colombia20 ETF (NYSE:GXG) in order to provide LSI subscribers with the opportunity to widely benefit from the additional economic growth that Colombia would achieve from the pact.

In the past, the LSI Model ETF Portfolio, in addition to containing conventional Latin American exchange traded funds, included positions in some funds to provide hedges to protect investments in our other model portfolios. These occasionally included long and short ETFs covering commodities produced by Latin American countries and even currency ETFs to hedge against monetary fluctuations that might have negatively impacted returns to U.S. investors.

The only commodity I'm currently thinking has a chance of providing major excess returns is corn. It's headed for the biggest gain in five weeks as weather conditions in South America endanger corn and bean crops.

For more ETF trading ideas read the attached update and ...

Happy trading!

Rudy

Leading stocks in the week included:
• Empresas ICA S.A.B. de C.V. (NYSE:ICA) +15%
• Compania de Minas Buenaventura S.A. (NYSE:BVN) +14%
• Braskem (NYSE:BAK) +11%
[This represents over a 25% move for Braskem in just two weeks as the world economic picture improves too!!]

Following a decidedly lackluster year in 2011, Latin American market indices, individual stocks and even the region's currencies jumped out the 2012 starting gate with a vengeance.

As for the U.S.-registered stocks covered by our Stock Investing Newsletter, 91.3% were in positive territory after the first three weeks of 2012 trading. If someone considers an annual gain of 20% a good year, then 10.1% of our coverage made it within the year's first 13 trading sessions. And with respective gains of at least 10%, more than half the list has reached the midpoint of the 20% 'good year' threshold by the end of the third week of this still-youthful year.

Read more about these stocks and why they are relatively more attractive now in the attached update and ...

Happy trading!

Rudy

These were the three fastest moving Latam stocks in the week as mentioned in the attached report:
• Cemex SAB de C.V. (NYSE:CX) +14%
• Braskem (NYSE:BAK) +13%
• Banco Macro SA (NYSE:BMA) +12%

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