Mad Money

The Best Play on Brazil?

Rio, De Deniro?

A stock that offers share-price growth and a respectable dividend yield can be hard to find, but it looks like that holy grail of investing exists in Brazil.

According to Cramer, the iShares MSCI Brazil Index is “the best of the Brazilian ETFs” and it touts a 3.3% dividend yield.

At a time when the US economy is mixed but improving, Brazil is decidedly “unmixed,” Cramer said. The world’s eighth-largest economy is “pure, unvarnished, 200-proof wood alcohol bullishness with one positive after another.” Hence the “Mad Money” host’s look southward for this near-perfect pick for your portfolio.

So what’s Brazil got going for it?

How about a gross domestic product that grew 1.2% sequentially in the second quarter and 8.8% from the same period a year ago. Or the economy’s 4% annual growth under President Luiz Inácio Lula da Silva—an avowed socialist, mind you. And now that term limits prevent Lula from seeking a third consecutive run for office, he has all but passed the baton to his chief of staff, Dilma Rousseff, who’s on track to win the presidency herself at the end of October. If that ends up being the case, Cramer thinks the bull run will continue.

This optimism isn’t the sole bastion of Jim Cramer alone, though. In the latest quarter, Brazilian companies were talking up their solid fundamentals, specifically Brazil’s domestic demand growth prospects in the second half of 2010 and in 2011. The country’s largest discount retailer, Lojas Americanas, delivered profits four times higher than the year before. Cielo, the largest card payment processor, earned a 26% increase in earnings per share. And SulAmerica, one of Brazil’s largest health-insurance outfits said that Brazilian expenditures on private health care have tripled since 2003.

A few more facts worth noting: The Central Bank of Brazil just came out with a survey of economic opinion that projected 7.55% GDP growth for 2010, easily outpacing the expected 5.07% rise in inflation. At the same time, delinquency rates are falling for loans to both individuals and businesses. The office vacancy rate in Rio de Janeiro is at just 0.6%, signaling a strong real-estate market. And regular viewers of “Mad Money” know all about Brazil’s burgeoning middle class, which now represents 50% of the population. That’s up from 40% just five years ago.

Of course, there are the “huge positives” of the 2014 World Cup and 2016 Summer Olympics, too, Cramer said. If the effect the Beijing games had on Chinese stocks in 2008 is any indication, we should see a similar run-up in Brazil during these events.

But given all this, why the EWZ? Especially when Cramer rarely recommends an ETF because too often they stick you with the bad as well as the good? Well, with Brazil, he said, “there’s just so much good” it’s worth owning the whole enchilada, or feijoada as it were. And the EWZ gives you exposure to Vale , Petrobras , Itau Unibanco , Banco Bradesco and other great Brazilian companies.

“When you have a tough market like the U.S., go with the easy market,” Cramer said. “Go with Brazil.”

When this story published, Cramer's charitable trust owned Vale.

Call Cramer: 1-800-743-CNBC

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