A popular Brazilian equities-tracking exchange-traded fund has surged 103 percent in the past year, making it one of the best-performing large U.S.-listed ETFs.
And some equity strategists see even more room to run for the iShares MSCI Brazil Capped ETF (EWZ).
"We're in the camp that the stocks are overbought, but they're in a multiyear bull market," Larry McDonald, head of global macro strategy at ACG Analytics and editor of The Bear Traps Report, told CNBC on Thursday.
The EWZ surged 61 percent in 2016, as oil and other commodities exported by Brazil enjoyed huge bounces, and economic optimism rose following former President Dilma Rousseff's impeachment.
McDonald, who correctly called for a Brazil rally at the end of 2015, said several factors could hurt the country's equities this year. A stronger U.S. dollar stands to hurt emerging markets, in which Brazil is included, and with elections coming up in 2018, political uncertainty could stand to take the equities off their course higher.
At the same time, if the country's central bank cuts interest rates again this year "by another 300 basis points, that's really good for stocks." At this juncture, he would recommend buying dips in Brazilian equities.
Brazilian stocks are likely to see more upside, agreed Stacey Gilbert, head of derivative strategy at Susquehanna.
"I do think it'll continue until, as we always say, until it doesn't continue. But I can say from a sentiment perspective, investors are still setting up that it will continue," Gilbert said Wednesday on CNBC's "Trading Nation."
In terms of fund flows, Gilbert noted, the EWZ has so far this year seen just under $200 million — roughly 20 percent of what the fund saw in all of 2016.
"So we're still seeing new money move into EWZ. What's interesting on the options side ... they've gone very quiet," Gilbert added.
Such a decline in options market activity might suggest investors are pricing in less risk in Brazilian names and thus buying less "protection" in options to hedge risk. Indeed, Gilbert said, much of the risk has left the Brazilian market, "suggesting that investors are more comfortable with it. So do I anticipate a 60 percent return again this year? Probably not."
Additionally, Gilbert has observed, emerging markets as a whole continue to be an area of focus for investors, and "obviously Brazil is no exception." A popular emerging markets ETF, the EEM, is up 10.5 percent year to date.
The financial sector is the top-weighted sector in the EWZ, comprising 37 percent of the fund, followed by consumer staples and then energy, weighted at 16 percent and 14 percent respectively.
From a technical perspective, the EWZ has continued to make a bullish series of "higher lows" and "higher highs," noted Miller Tabak equity strategist Matt Maley.
"And it's been above its 200-day moving average for a while, but this week, or in the last four, five days, it's broken above its 200-week moving average. So it's got some nice momentum there and that's very positive," Maley said Wednesday on CNBC's "Trading Nation."
What gives Maley pause at this juncture is not the fund's technical backdrop but rather the historically tight correlation between Brazil equities and crude oil.
"Now, there was a big divergence however, in 2012, 2013, when we were really right in the meat of that bear market in emerging markets. But that correlation in the last year and a half, two years has reasserted itself, and oil is really not breaking out," he said.
"If [oil] can break out, that's going to give it much more higher potential for it to have another good year. But with oil, the way it is right now, it might limit that upside."