Cashing in on the World Cup and Olympics in Brazil: Anheuser-Busch InBev NV (BUD)

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Buying this ETF is a nice strategic play. It’s cheap relative to iShares MSCI Brazil Index (NYSEARCA:EWZ) – the more talked about Brazilian ETF – and yields over a full percentage point more (3.78% versus 2.52%). And by gaining broad exposure to utilities (27.19%), industrials (19.48%), basic materials (14.37%), real estate (11.32%), consumer cyclicals (6.51%), energy (5.38%), and communication services (4.49%), you’re well positioned to reap the benefits of Brazil’s infrastructure spending binge.


Other Plays

AECOM Techmology Corp (NYSE:ACM)

This global architectural giant was awarded the contract to design the master plan of the Rio 2016 Olympic Park. If the name sounds familiar, it may be because they were given the same job for the 2012 London Olympics, or possibly because they hold a host of multi-million dollar planning and construction contracts around the globe. AECOM is the best at what they do (they beat out over 100 other firms for the Rio contract) but their task is daunting: transform an infrastructure nightmare into a well oiled machine before 2 million or so expected tourists descend on Rio in 2016.

Caterpillar Inc. (NYSE:CAT)

Two years ago the company invested $180 million to set up a production facility in the city of Campo Largo and expand an existing facility in Piracicaba. They’re well positioned to take advantage of the construction boom in the coming years. But for Caterpillar, that’s not the full story. With the discovery of pré-sal reserves that could contain as much as 100 billion barrels of oil, the marine and petroleum offshore markets are primed for sustained growth and Caterpillar is already cashing in: they recently secured a contract to power 16 offshore supply vessels.

Anheuser-Busch InBev NV (NYSE:BUD)

After pressure from FIFA, Brazilian president Dilma Rousseff announced the government will temporarily suspend a law banning the consumption and sale of beer inside stadiums for the duration of the Cup. As a FIFA World Cup Sponsor with exclusive “pouring rights” inside all stadiums during the 2014 World Cup, AB-Inbev stands to benefit substantially from the decision. Ambev, the company’s Brazilian subsidiary, is the biggest brewery in Latin America. Its brand portfolio includes beers like Antarctica, Brahma, Bohemia, Skol, Stella Artois and soft drinks like Guaraná Antarctica.


The Bottom Line

Brazil is scrambling to improve its shoddy infrastructure and is spending tremendous amounts of cash to do so. Its mid to long term growth prospects are uncertain, but the economic sectors that will drive the construction boom represent lucrative investment opportunities.

The article Cashing in on the World Cup and Olympics in Brazil originally appeared on Fool.com and is written by Garrick Sheldon.

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