GOL Linhas Aereas Inteligentes S.A. (GOL) has announced encouraging results for the third quarter of 2009. The company posted net income of R$77.9 million, with a net margin of 5.2%, versus a net income of R$353.7 million in the previous quarter and a net loss of R$510.7 million in the same period of 2008.

Reflecting the optimization of its cost structure and the focus on more profitable markets, GOL's operating results were positive for the fifth consecutive quarter, totaling R$99.1 million, with an operating margin of 6.6%.

The complete list of Brazil ADRs traded on U.S. exchanges is listed below:

Wednesday on CNBC, Jim Rogers insisted that China and Brazil are the only BRIC countries worth investing in. Despite an election conducive to more capitalistic policy, India's ritualistic culture discourages competition, greed and other growth drivers. Russia is still in a newly liberated economic state, in which citizens have so much incentive to enjoy previously denied economic freedoms that they will make frivolous financial decisions until enough time passes or national policy encourages productivity and saving.

China's case is well documented and will not be rehashed here, as I believe Brazil is the only market worth investing in today. Brazil is the only nation with an immediate future of increased production and consumption. Unlike China, Brazil has provided more developed economies things they need, not things they want (sorry if I underestimate the value of your Pokemon cards, Playstations and Beanie Babies). The death of the American consumer only affects Brazil if it is a literal one, meaning Americans no longer need sugar, bananas or oil.

Emerging markets are the best performing markets this year. In these markets, the main market indexes of countries like Brazil have skyrocketed year-to-date (YTD) relative to other countries. For example, the MSCI Brazil Index ETF (EWZ) is up an incredible 99.42% as of September 30, 2009. Some of the Latin American ADRs have also had great runs.

The list below shows the Latin American ADRs which are up 100% or more as of Oct 6, 2009:

Yesterday, GOL Linhas Aereas Inteligentes S.A. (GOL) filed a registration statement with the Securities and Exchange Commission for a proposed global offering of preferred shares, including preferred shares in the form of ADSs. The company expects to raise somewhere between R$550 million and R$650 million, depending on market conditions.

The company intends to use the proceeds for general corporate purposes and to strengthen its balance sheet, particularly its cash and cash equivalents position.

As of July 31, 2009, the S&P 500 Index and the Dow Jones Composite Index are up 10.97% and 2.47% respectively. But many of the ADR indices have gone up much higher. The Year-To-Date (YTD) performance of some of ADR indices are as follows:

• BNY Mellon ADR Index: 21.44%
• BNY Mellon Asia ADR Index: 27.54%
• BNY Mellon Dev Mkts ADR Index: 16.65%
• BNY Mellon Emg Mkts ADR Index: 43.22%
• BNY Mellon Europe ADR Index: 15.59%
• BNY Mellon Lat. Amer. ADR Index: 53.96%

So far this year, the developed markets are lagging the performance of emerging markets.

The past few days have featured rising markets as economic reports turned out to be less negative than expected and a few major companies have beat earnings expectations. One particular sector showing strength is airline stocks - but not likely the ones you are thinking of. While large behemoths like Delta Air Lines (DAL) and AMR Corp (AMR) - the parent of American Airlines - have remained rangebound, some niche airlines such as Allegiant Travel Company (ALGT) and a few non-US airline stocks listed on US exchanges have seen strength.

It’s been quite some time since my fund invested in Gol Intelligent Airlines (GOL), but the company’s investment prospects appear to be improving by the day. Most recently, the stock broke above resistance around $6 and has rallied more than 20% this week alone. Investors are quickly realizing that earnings could pick up significantly - with the potential to reach 2006 levels when the stock crossed above $40 to mark its all-time-high.

I noticed the following headline last week:

“Virgin Atlantic boss warns no airlines will make money this year.”

The Geneva, Switzerland-based International Air Transport Association (IATA) announced a revised outlook for the airline industry in 2009. Due to the worsening economic conditions worldwide, IATA increased the global loss outlook from $2.5B in December 2008 to an expected $4.7B loss in FY2009.

Some of the key points from the news release are:

[Excerpted from Bill Cara's Daily Report]

The equity market of India dropped -7.25% Wednesday as the CEO of Satyam Computer Services, the country’s fourth largest outsourcing company quit, announcing that his company profits were overstated. Reuters is reporting that the India economy and stockmarket is headed for tough times. Caveat emptor.
http://finance.yahoo.com/news/Indias-Satyam-chief-quits-rb-13987465.html

A strong financial foundation positions LAN Airlines (NYSE: LFL) as a candidate for growth. With a net result of US$122 million for the last quarter, a BBB international credit rating (Fitch), and only 8% of debt maturing in the short term, the company is in a better position to handle an economic downturn than many of its competitors. For comparison, the regional competitors TAM and Gol reported a negative ROA of (-18.26%) and (-18.72%) respectively, for 3Q ’08.

Research Oracle changed their LAN rating to a STONG BUY on November 26, with an ADR target price of US$11.02, reflecting a 30% upside potential for the coming 6-12 months. The recommendation was founded on a better than estimated 3Q result, an outlook for growth due to expansions in the domestic and regional market (although offset by a slowing global economy), and a positive impact on margins because of lower fuel prices.

Many foreign stocks that trade as ADRs in the US have fallen heavily in-line with their home country’s market performance. In order to identify the ADRs that are down more than 80% year-to-date, I ran the screener and ended up with the 38 stocks listed below.

Foreign ADR Stocks Down > 80%

• G-20 recap. G-20 leaders met this weekend to discuss solutions to the global financial crisis. The group called for a regulatory crackdown on high-risk lending and investments, and will require banks to meet higher capital standards and better risk management. They also indicated an openness to so-called dynamic capital rules, as currently used by Spain's banking system. President Bush blamed a looming global recession on investors who "sought higher yields without an adequate appreciation of the risks" and on supervisors who failed to address market dangers. Summit participants wanted to institute ways to increase international surveillance of firms that operate across multiple countries. However, at the end of the summit, it remained unclear how much power regulators would have and whether there will ultimately be a global financial markets authority. G-20 leaders have until March 31 to come up with plans to implement the discussed proposals, and will meet again in April. (Read the official G-20 statement.)
• Analysts weigh in on the G-20 summit. Analysts say calls for more regulation could rein in excessive risk but will also make financial services less profitable. Economist Mark Cliffe warns "efforts to make the system more robust may make recovery harder in the short term," while Carl Weinberg of High Frequency Economics Ltd. says immediate action is "what matters for markets at the moment, not regulatory changes for the next decade." Simon Johnson, formerly of the IMF, thinks stricter lending standards for banks could backfire because "the last thing you want to do in a global credit crunch is go around and basically tell people to tighten, tighten, tighten."
• FDIC mulls debt-guarantee changes. The FDIC may alter its $1.4T debt-insurance program after companies complained it would create an exodus from the overnight federal funds market. Firms including JPMorgan Chase (JPM) and Bank of America (BAC) said the original proposal would have made overnight loans too expensive compared to alternatives like direct loans from the Federal Reserve. As such, the FDIC may switch to a sliding scale of fees based on the maturity of the debt instead of the flat fee it had previously suggested. "Complexity is somewhat inevitable," said FDIC's Art Murton, but "we're doing our best to take away unnecessary confusion." The FDIC plans to release final regulations for the program as early as this week, and banks have until December 5 to decide whether they will participate.
• Insiders snap up company shares. General Electric's (GE) Jeffrey Immelt and Citigroup's (C) Vikram Pandit are among recent insiders to buy shares of their own companies. CEOs, directors and other senior executives at NYSE-listed companies bought $1.37B worth of equities in October, buying $57 worth of shares for every $100 sold last month, up from a low of $21 bought in June. A bullish signal for two decades, insider buying now has a mixed record and could be a sign of an impending decline. The last time insiders bought this much was in March, and the buying spree was followed by a significant drop in the S&P 500 a month later. "Everyone’s drinking the Kool-Aid," says money manager Michael Levine. "These guys know their companies better than the market, so they think they’ll be right. But the economic slowdown has happened much more quickly and has been much deeper than people expected."
• Some clamor for federal money,... First it was banks, brokerages, mortgage lenders, insurance firms. Then automakers joined the fight for government funds. The most recent group to come hat in hand to lawmakers is now the auto-parts makers. As Detroit's Big Three wait for aid, auto-parts makers are arguing they deserve access to TARP funds too, and over 100 parts maker companies have signed a letter sent to Congress today asking for a change in pending legislation to make their industry eligible for federal money. Auto-parts suppliers employ 600,000 people, nearly three times as many as those working for the Big Three automakers, and say they are already feeling the effects of automakers' financial woes.
• ...others keep a wary distance. Over 60 banking institutions have indicated they are eligible to receive more than $173B via TARP, but several institutions have made clear that they don't want any help. Over 35 companies, ranging from United Financial Bancorp (UBNK) to Charles Schwab (SCHW) to nine-branch thrift Ocean Shore Holding (OSHC), have chosen not to apply for federal aid. Some, like United Financial Bancorp, say they are 'financially solid' and have no need for the aid. Others say TARP has 'too many unknowns within the program' for a bank to prudently enter, or are resistant to TARP rules that limit stock buybacks for banks. One thing the institutions have in common is their desire to make sure the public knows they have not applied for aid; analysts are expecting an industry shake-out and say banks that apply for aid and are rejected face almost certain failure.
• GM sells assets. General Motors (GM) sold its remaining 3% stake in Suzuki Motor (SZKMF.PK) on the open Tokyo market for around $230M. Desperate for cash, GM sold the stock almost 5% below Suzuki's 25-day moving average, and at less than half Suzuki's high for the year. CEO Rick Wagoner stressed GM continues to value its 'strategic relationship' with Suzuki, and said the move was 'based on a mutual agreement.' The sale marks GM's first exit from Suzuki since it first invested in the Japanese company in 1981.
• Toyota faces downgrade. Toyota Motor (TM) is the automaker with the best credit, but may not hold that distinction for long. Fitch Ratings, citing 'unprecedented' challenges in the auto industry, has placed the company on 'Rating Watch Negative' and will review the carmaker in the next several weeks, potentially leading to a downgrade from Toyota's current AAA rating. A ratings cut would raise borrowing costs for Toyota and would be the company's first downgrade in a decade.
• Bonuses begone. Seven top executives at Goldman Sachs (GS) have decided to give up their 2008 bonuses, forfeiting potentially tens of millions of dollars in payouts. A company spokesman said the executives felt it was 'the right thing' to do. Wall Street's top players have been under pressure from regulators and investors to eliminate bonus payments this year. Goldman's move is being closely watched by Wall Street, but it is unclear whether other firms will choose to follow suit.
• GE eyes expansion. General Electric (GE) CEO Jeffrey Immelt said his company has the resources to take advantage of buying opportunities during the economic downturn. In specific, he named the oil and gas, media, infrastructure and aviation sectors. The professed interest in buying media assets has brought some reassurance to investors who worried GE might sell its NBC Universal unit.
• Recession metrics. If a survey by the National Association of Business Economists (NABE) is any measure, the economic future of the U.S. looks grim indeed. Economists believe the U.S. is in a recession, the economy will contract more severely in Q4, the decline will extend into early 2009 and unemployment will likely peak at 7.5% by the third quarter of 2009. NABE President Chris Varvares said economists have become "decidedly more negative on the economic outlook for the next several quarters" as the credit crisis intensifies and spills over to the 'real economy.'
• Recession hits Japan. Japan, the world's second largest economy, entered its first recession since 2001 last quarter, and conditions are expected to get worse before they get better. GDP shrank an annualized 0.4% last quarter, vs. predictions of 0.1% growth, and had contracted 3.7% in the quarter before. The recession could grow more severe as demand for exports falls and the Japanese government faces serious constraints in its ability to stimulate growth.

Earnings: Monday Before Open

• Covidien (COV): FQ4 EPS of $0.73 beats by $0.05. Revenue of $2.6B (+12%) in-line. (PR)
• Gol Linhas Aereas Inteligentes (GOL): Q3 EPS of -R$1.47 misses by R$1.12. Revenue of R$1.8B (+38.5%) vs. R$1.3B. (PR)
• Lowe's (LOW): Q3 EPS of $0.33 beats by $0.05. Revenue of $11.7B (+1.4%) vs. $11.6B. (PR)

Today's Markets

• Asia markets closed mixed. Nikkei +0.7% to 8,523. Hang Seng -0.1% to 13,530. Shanghai +2.2% to 2,030. BSE -1.0% to 9,291.
• In Europe at midday, stocks are trading down. London -2.0%. Paris -2.0%. Frankfurt -2.8%.
• U.S. futures: Dow -0.9%. S&P -1.0%. Nasdaq -0.8%. Crude -2.7% to $55.49. Gold -0.2% to $740.80.

Monday's Economic Calendar

• 8:30 Empire State Mfg Survey
  9:15 Industrial Production
• Notable earnings before Monday's open: COV, GOL, LOW, TGT
• Notable earnings after Monday's close: CTRP

Seeking Alpha editor Eli Hoffmann contributed to this post.

Airline companies have taken flight recently in spite of the October stock market sell-off, tremendous volatility, and global economic slowdown, as crashing crude oil prices lower the cost of jet fuel for the industry.

Many notable names in Latin America have been trading down recently. We wanted to find out from Zacks senior Latin American markets analyst Claudio Freitas, CFA if there were stocks we should keep away from or consider great value opportunities.

With earnings season winding down, have companies in your coverage performed as expected? Were there many surprises?

Last week's punishment of the airline sector has provided loads of opportunity for those wishing to buy low. In fact, the AMEX Airline Index finished the week at a 15 year low of $18, almost $35 lower than its 52-week high of $53.

Soaring oil was the culprit for last week's bloodletting, although oil was up less than 5% on the week to the $135 mark, it did end up reaching a new all-time high and in the process, spooked investors into giving away their shares as panic dominated the Street with some stocks shedding as much as 50% (UAUA).

It is amazing that the Brazilian airlines have far outperformed the airlines in the United States over the last couple years. Of course, many Brazilian stocks have been performing well. See if any of these transportation related stocks from Brazil can move your stocks forward.

EMBRAER - Empresa Brasileira de Aeronutica S.A. (ERJ) is the largest exporter in Brazil, and third largest in terms of yearly commercial aircraft delivery and fourth largest workforce among all aircraft manufacturers. The company has its headquarters, production facilities and design offices in Sao Jose dos Campos, Sao Paulo. Currently, the company has maintenance and commercial sites in several countries around the world, including the United States, Singapore, China and France.

Three months have gone by, so it’s time to report on our LatAm buy recommendations. As in our previous update, each stock’s title line typically features the ticker code, the price on July 22nd (date of our previous progress report), price as of Friday’s close, percentage change in price and finally the new recommendation. Any new positions are dated from the day of recommendation, and closures are noted accordingly. Prices are in US Dollars ($), Canadian Dollars (C$) or Brazilian Reales (R$), according to the stock. General comments, comparisons to our benchmark and conclusions are found at the end. All charts are courtesy of the nice people at bigcharts.com.

Aurelian Resources (AUREF.PK)

Many people talk about how important it is to buy shares of companies that have strong family or management ownership, because that means there is someone intimately involved with the day to day operations who has the same motivation as common shareholders.

And I agree... in general. But when a family or individual has a real majority of the shares, or a majority of the voting shares, you can sometimes get into trouble. So here we have a rare opportunity to hear a shareholder be a little bit grumpy about an event that has caused a one-day 10% move UP in one of his stocks.

On July 17th 2007, GOL Linhas Areas Inteligentes S.A. (GOL) was awarded “best performing airline in the world 2006” for its revenue category (market cap of between U$1Bn and U$4Bn) by the prestigious industry magazine Aviation Week and Space Technology. However we would be surprised if many remember this, as on 17^th July a different Brazilian aviation event made far more headlines. A TAM (TAM) airlines jet slewed off the runway at Sao Paolo Congonhas airport and crashed into a nearby warehouse, killing 199 people in Brazil’s worst ever air accident.

Bad Luck