The Brazil turnaround story garnered headlines and investors'
attention in the first half of the last decade. But the past two years
have seen an economic slowdown and a pullback in stock prices that I
believe signals a great long-term buying opportunity.
The drop in
oil prices, after a double-digit gain from $85 in December to $98 in
February, has seen energy stocks unwinding. But global political risks
and potential disruption concerns always provide bullish price shock
possibilities in crude.
I see the combination of Brazil and rising oil prices as an investment theme that is likely to do well in the future.
Petrobras (NYSE: PBR),
an integrated oil and gas company in Brazil, fell from a peak at $77 to
a low of $14 in 2008. The stock saw a recovery in 2009 to $53 before a
long, long decline. It currently sits near $15, and I'm watching for a
double-bottom to form at that $14 extreme low, which should act as a
base.
The 2012 high at about $32 is more than 100% higher than
the current price around the $15 area. A modest price objective is the
halfway point of that 2012 high to 2013 lows, at about $23.50. (more)
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