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Score a goal with these top stocks in Brazil you MUST check out

Mar 19, 2019

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions
Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions

 

  • Brazil has seen a significant improvement to its outlook over the last six months with a new president and better prospects for growth
     
  • We are highlighting "Top Buys" from our Brazil All-Cap Global Top Stock Ideas
     
  • This week Brazil's new President Jair Bolsonaro is visiting Washington, DC; he has indicated a desire to align Brazil much closer to the United States, something that has not been the case for over 20 years

 

Brazil All-Cap "Top Buy" Stocks

Company Name Ticker Sector Industry Brazil All-Cap Model Ranking
B3 S.A. - Brasil, Bolsa, Balcão BOVESPA:B3SA3 Financials Financial Exchanges and Data Top Buy
Alupar Investimento S.A. BOVESPA:ALUP11 Utilities Electric Utilities Top Buy
Transmissora Aliança de Energia Elétrica S.A. BOVESPA:TAEE11 Utilities Electric Utilities Top Buy
Companhia Brasileira de Distribuição BOVESPA:PCAR4 Consumer Staples Hypermarkets and Super Centers Top Buy
Companhia de Gás de São Paulo - COMGÁS BOVESPA:CGAS5 Utilities Gas Utilities Top Buy
Odontoprev S.A. BOVESPA:ODPV3 Health Care Managed Health Care Top Buy
Construtora Tenda S.A. BOVESPA:TEND3 Consumer Discretionary Homebuilding Top Buy
Eneva S.A. BOVESPA:ENEV3 Utilities Independent Power Producers and Energy Traders Top Buy
Engie Brasil Energia S.A. BOVESPA:EGIE3 Utilities Renewable Electricity Top Buy
Lojas Renner S.A. BOVESPA:LREN3 Consumer Discretionary Department Stores Top Buy
Natura Cosméticos S.A. BOVESPA:NATU3 Consumer Staples Personal Products Top Buy
Tegma Gestão Logística S.A. BOVESPA:TGMA3 Industrials Trucking Top Buy
Cia. Hering BOVESPA:HGTX3 Consumer Discretionary Apparel, Accessories and Luxury Goods Top Buy

Source: Capital IQ

 

Some highlights from our Top Buys in Brazil:

  • B3 (B3SA3) is the operator of the primary stock and options exchanges in Brazil.  B3 provides one of the best operating leverage stories among the nonbank financials as revenue generation should continue to outpace expense growth. Expect revenues to be supported by double-digit volume growth reflecting a low interest rate environment, an increase in economic activity and increased market sophistication. Furthermore, the company is expected to return 120-150% of its 2019 IFRS net income to shareholders in the form of dividends and buybacks. 
     
  • CBD, or Companhia Brasileira de Distribucao, (PCAR4) is a national operator of supermarket chains, hypermarkets, electronics stores, convenience stores, and wholesale warehouses, controlled by Casino of France. CBD is in the middle of a turnaround of its non-cash and carry business, including the closing of some stores and the remodeling of others.  Its cash and carry business continues to expand margins.
     
  • Companhia Hering (HGTX3) is a retailer and manufacturer of fashion apparel.  After almost 4 years of stagnating, Hering has finally hit an inflection point with same store growth finally returning.  Improving consumer confidence and disposable income are drivers for Hering.
     
  • Eneva (ENEV3), Engie Brasil Energia (EGIE3) and Alupar (ALUP11) all operate in the electric generation and transmission sector.  The Brazilian regulator Aneel announced higher allowable returns on energy projects, something that came as a surprise and has been taken as a very positive sign for the sector going forward.  Increasing energy use with increased economic activity is a positive for all three. 
     
  • Lojas Renner (LREN3) is the largest retailer in Brazil with one of the best retail margins in the entire world.  Improving consumer confidence is driving increased traffic, delivering same store sales growth above peers.  Store expansion continues as does impressive top line growth.
     
  • Natura (NATU3) is a manufacturer and distributor of cosmetics. Natura & Co is one of the largest cosmetics manufacturers globally. Natura was founded in Brazil in 1969 and has transformed itself from a single-country, single-channel, and single-brand business into a global player in the beauty industry with the acquisitions of Aesop in 2016 and The Body Shop in 2017. 
     
  • Tegma (TGMA3) is a logistics provider for the transport of new vehicle and management of vehicle fleets.  Brazilian vehicle production cratered from 3.5 million to 2.8 million, with a recent return to growth.  Improving economic conditions will drive cars sales and the demand for Tegma's specialized services.

 

Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS
Global Top Stock IdeasTOP LONG & TOP SHORT STOCK IDEAS FOR GLOBAL MARKETSMONTHLY TOP IDEAS FROM OUR MULTI-FACTOR QUANTITATIVE MODELS