Table of Contents

1.  Market Outlook
2.  Profit from the Falling Dollar
3.  Gafisa (GFA)
4.  Additional Investing Ideas
5.  Investor Trivia -- Emerging Markets
6.  Featured Topic -- ADRs
7.  Free Investing Resources

Today's Top Stock Picks

Five Ways to Profit from the Falling Dollar
The weakening dollar can be a great thing for those who invest in the right securities.
Read More. . .

A Brazilian Homebuilder Seeing Extraordinary Growth
One company that has caught my eye recently is Gafisa (GFA); a Brazilian firm that's trying to bring North American-style housing developments to the nation.
Read More. . .

Market Outlook

Earlier this summer, the Dow Jones Industrials chugged ahead 1,000 points in less than three months -- a trip that culminated on July 19th when the index closed precisely at 14,000. Of course, no one knew it at the time, but the Dow would quickly sink back below that threshold the very next day and has remained below it ever since -- until now.

This past Monday, the Dow soared nearly 200 points, crashing back through the 14,000 mark and racing out to a new record high. Ironically, the catalyst for this rally was the very thing that derailed the market's initial advance back in July -- the implosion of the subprime lending sector and the ensuing turmoil in the credit markets.

Traders have been on edge for months, fearing that the subprime fallout would spread elsewhere, bringing the entire economy to its knees. However, Citigroup (NYSE: C) helped quell some of those fears this past week -- not by sounding the "all's clear," but simply by attaching a specific number to the damage.

The banking giant warned that third-quarter earnings were likely to tumble -60%, weighed down by $3.3 billion in asset write-downs and losses on subprime mortgage-backed securities. Merrill Lynch (NYSE: MER) followed suit, saying that $5.5 billion in write-downs would lead to hefty third-quarter losses. But a funny thing happened: the shares of both companies gained ground on the news.

Wall Street hates uncertainty, and while losses at companies like Citigroup and Merrill Lynch are steep, they could have been much worse. By coming clean with a damage report (and forecasting a return to normalcy in the fourth quarter), the firms provided a much-needed dose of reassurance.

Throw in an upbeat employment report (that revised August's troublesome decline of 4,000 jobs into a gain of nearly 90,000) and traders had yet another reason to cheer. In only the past week, the Dow has tacked on 170 points, and it's now venturing further into record territory.

While the domestic markets seem to have regained their footing, the same can't be said of the U.S. dollar. However, a falling dollar can be a boon to investors that know how to take advantage of the trend -- and below I provide a quick five-point checklist highlighting the best places to profit.

Also in today's TopStockAnalysts Digest, Paul Goodwin, editor of the Cabot China & Emerging Markets Report, checks out the blueprints on Gafisa (NYSE: GFA, $33.29). Institutional investors have been piling into this expanding Brazilian homebuilder in recent months, and Paul explains why you might want to as well.

Good Investing!

-- Nathan Slaughter
Co-Editor
TopStockAnalysts Digest

It's no secret that the U.S. dollar has been in a precipitous slide lately. In fact, the greenback slipped to parity with the Canadian dollar for the first time in 30 years last month, and also tumbled to all-time new lows against the euro.

As a result, it now takes about $1.40 worth of U.S. currency to buy a single euro -- up from about $0.83 in early 2002. In other words, the same 200 euro per night Paris hotel room that cost $166 five years ago will now set you back about $280. Fortunately, what's bad news for the U.S. traveler can be great news for the U.S. investor.

The dollar has been pressured by a number of macroeconomic factors, such as a ballooning domestic trade deficit. In fact, the U.S. imported about $760 billion more than we exported last year -- that's equal to about 6% of the nation's entire GDP. And of course, the Fed's recent half-point rate cut has only added fuel to the fire -- lower interest rates make dollar-denominated debt less attractive to foreign investors.

Whatever the underlying cause, many economists expect the dollar to remain weak, and forward-thinking investors like Warren Buffett have already taken steps to cash in on the downfall of the dollar. So what can you do to take advantage? Here are five places to focus your search:

1.)  U.S. Multinationals -- Domestic companies find that a falling dollar makes their exported products cheaper to consumer in foreign markets. Therefore, U.S-based firms shipping goods overseas can see a boost to their business. Plus, domestic companies earning a good chunk of their revenues in foreign markets will enjoy a boost from favorable currency translation when all those sales are counted up and converted back into U.S. dollars.

2.)  Foreign Stocks -- Suppose you invested 10,000 euros ($8,300) in a European stock in 2002. Even if the share price went nowhere, thanks to a falling dollar you could sell the shares, and those same 10,000 euros would now be worth $14,000. That's almost a +70% gain from the currency fluctuation alone -- with no share price appreciation. Of course, most foreign stocks have been surging lately, which would make the gains even more dramatic.

Keep in mind, though, that just as a weak dollar makes exported goods cheaper overseas, it makes imported goods (like Japanese cars) more expensive for American consumers. Therefore, it might be better to avoid foreign firms with large exposure to U.S. markets.

Editor's Note:  Because this article is fairly extensive, we could not include it in its entirety within today's newsletter. Please visit this link to read the remainder of this article on our web site.

One company that has caught my eye recently is Gafisa (NYSE: GFA, $33.30), a Brazilian company that's trying to bring North American-style housing developments to Brazil. The nation's population is more than +70% larger than that of Mexico, but its housing market is about half of that in Mexico. But as prosperity works its way through the Brazilian economy, more and more people will be able to afford homes, and Gafisa is bringing the efficiency of modern building methods to the building process.

Whatever you may think about urban sprawl and real-estate developers in general, you can't say that they aren't profitable. Revenues at Gafisa for 2006 were up +62% from 2005, and earnings per share more than doubled from $0.20 to $0.54 per share. Combine this with an after-tax profit margin of 12.1%, and the numbers look good, making it clear why institutional sponsorship almost doubled between the first and second quarter of this year.

Another trend working in Gafisa's favor is geographical growth. Two-thirds of 2006 revenues came from building in the Sao Paulo region, with another 27% from the area around Rio de Janeiro. Now Gafisa is branching out, forming joint ventures with regional builders in the states of Maranhao, Paraiba, Rio Grande do Norte, Ceara, and Pemambuco.

And finally, GFA has just been made a part of the Bovespa Index, the Brazilian equivalent of the S&P 500.

Technically, GFA has an interesting chart. The stock came public last March at $24 per share and ran quickly to $36 at the beginning of June before correcting for a month. It returned to the $36 level in early July, and then took a two-month tumble, plunging as low as $21 during the infamous subprime mortgage panic. But beginning on September 11th, the stock began a determined run that has brought it back toward old highs on good volume. Eventually, I look for a breakout into new territory above $36.

GFA has exactly the kind of triple threat I like to see in a stock: a good story, strong fundamentals, and a chart that reflects some enthusiasm from investors. I think it's worth a look.