Aracruz: Good Brazilian Play

Aracruz (ARA) is the leading eucalyptus pulp company from Brazil. It produces eucalyptus pulp, a hardwood pulp used by paper manufacturers to produce a range of products, including tissue, printing, and writing papers; liquid packaging boards and specialty papers.

The Brazilian climate is conducive to this type of plantation, hence Aracruz grows trees faster, and at a lower cost than its US competitors. To give you some idea of their pricing advantage, Aracruz's cost to produce a ton of pulp is $220-$230 per ton compared to over $400 in the U.S., so it has a huge competitive advantage. 98% of the company's product is exported to North America, Europe, and Asia.

Additionally, Aracruz pays a 4.5% dividend. The risk of being a product of an emerging market certainly adds risk to this name, but this risk might be worth taking. The stock has formed a steady base for the last 3 months and seems like its about to play some calypso. Buy before the party passes you.