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Will the World Cup make Brazil stocks a buy?

The Brazilian team may be favored to win the World Cup, but analysts don't believe playing host to the tournament will boost the country's economy or its shares.

"The World Cup is not going to make it for Brazil, as has not been the case for South Africa or others before," Alicia Garcia-Herrero, chief economist at BBVA, told CNBC. "We've learned from experience that the boost from World Cups and Olympic games is relatively limited."

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She expects the boost to Brazil's gross domestic product (GDP) this year will add up to less than half a percentage point, leading to a total economic growth forecast of 1.5 percent.

To be sure, she expects playing host will boost the tourism sector. "But tourism is a small share of GDP in Brazil, unfortunately."

She also expects a boost in consumption if Brazil wins the World Cup.

"But if it doesn't, we might even see a worsening of the current situation," she said, noting that declining consumption is behind the country's very poor economic data over the past year or so.

Photographer | Collection | Getty Images

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Garcia-Herrero isn't alone in doubting the World Cup will be a win for Brazil's economy or its stock market.

"Unfortunately, it brings with it higher inflation, higher labor costs and all kinds of other things, which is exactly what Brazil didn't need at this point," David Riedel, president of Riedel Research Group, told CNBC.

He believes the country's investment outlook isn't terribly bright and prefers to invest in other emerging markets.

"I wouldn't be jumping in with both feet at this time," he said. "There are individual stocks that we like, but we wouldn't be buying the index."

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The Bovespa index has recovered around 7 percent so far this year, after falling over 15 percent last year. In a note Wednesday, Societe Generale said Brazil's market is expensive, offering a risk premium of only 0.7 percent, below its average of 2.3 percent.

While the country offers positives from a 200 million population, ample farmland and water as well as self-sufficiently on food and fuel, "investors don't like the government intervention into business," Riedel said. "They don't like the history of hyperinflation and what they really don't like is the expectation that the economy is going to grow 1.7 percent this year and 2 percent next year."

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Among Riedel's stock picks are U.S.-listed technology play MercadoLibre, which is eBay's Latin American partner, and footwear maker Grendene.

"We like some of the retailers," he added. "There are still a lot of change happening in the mass market in terms of access to formal retail and certain products."

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But on Brazil's upside, it's widely expected to win its own World Cup.

"All roads seem to lead to Brazil winning the World Cup. Home advantage, past record, and form are but a few of the tailwinds," Deutsche Bank said in a note Monday. "Naturally, market odds and our own quantitative models come to the same conclusions."

—By CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

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