Note: I think I want bets on Brazil, rather than world macro bets? No matter how convincing VALE sounds for example. Make sure you know exactly what you want and what each stock represents a play on.
*ABV – Brazil beer, Canada beer, Pepsi bottler. Zero debt expected to increase (create divs for shareholders). Significant pricing power (71% market share) leads inflation. Valuation below em market P/E.
BBD – Bradesco bank. Growth discount. Overstated regulatory (interest rate) concerns; see long-term potential. Loan growth, strong margins, better asset quality. Poor admin expense control.
*BTM – Brazil telecom. Earmark for legal provisions sig. more than sister company. Freeing up is worth $3.50/share. Cheap P/E. Not as good div as I’d want from telco.
BAK – Petrochemical. 46% disc to Asian peers. Strong comp position. Leverage to Brazil. Up cycle in petrochem industry.
*BRFS – Meat, pastas, pizzas and margarine. Think poultry price incr. coming since beef skyhigh; largest poult exporter. Unparalleled scale and pricing postmerger. Largest domestic expos. Lowest lvg.
EBR – Electrobras. Dirt cheap P/E. New, prof management. Poor cash generation. Lack capital discipline. Concession renewal major event. Gov’t doesn’t seem inclined to give exc. returns in renewals due to historical funding of util.
ELP – Util. Negative on capital discipline, renewals, not cheap, etc.
CIG – Util. Valuation looks cheap vs growth?
*SID – Integrated steel, flat. Strategic value to iron assets. Div drops to 4%. Flat some inventories.
*CPL – High 8.1% div. Top management. Capital discipline (accuse others of not being disc.) and M+A overhang over.
EBR – Aerospace manu. 20% share executive jets; 60% regional jets. Orders accelerating; backlog improving. Healthy loads and growth in airline world. 23% disc to Boeing. Currency questions.
*GFA – Homebuilder. 2% div. 13.2 P/E. Funding? Delay in decision to cancel projects – poor management?
*GGB – Long steel. Brazil main market. Lower long steel inventory Brazil. 1.8bn tonnes iron ore.
*GOL – Brazil-focused airline. Jammed Brazil airports w/ no capacity increase. Beneficiary of LAN/TAM merger – market not int’d in pan-LatAm carrier. F/X play – $ weakness?
*ITUB – Huge Itau bank. Mortgages growing 50%/year, only repping 3.5% GDP. ITUB first moving bank. Seems better than BBD.
NETC – Something weird.
PBR – Petrobras. Too large, maybe. Feel like this is an econ play at this scale.
*SBS – Sao Paulo water utility. 20% disc to power util. Switch tariff methodology from cost-plus to asset-based price-cap. First tariff review to become landmark in September.
*TNE, TSP, TSU – Different telcos. TNE high dividend yield, owner of BTM?
UGP – Petrochem.
VALE – Iron ore? Iron ore continues to be strong as steel manu ramp up. Stock underperforms at 12%+ instead of 25% BHP, 29% Rio Tinto and 35% ore price increase. 14% of Bovespa index (huge). 5% div possibility.
*AESAY – Utility? Traded as a bond-type stock from 10% int rate. 100% capacity contracted to AES Eletropaul until 2015.
ALLAY – Monopolistic railroad. End of monopoly and ability to charge discount to highway.
BDYVY – Bank. Warrants 25% dilution. 6% premium to peers.
*BDORY – Bank of Brasil. Discount to ITUB…
MRRTY – Marfrig post Keystone acquisition. McDonald’s, beef, poultry and pork. 2nd largest beef producer Braz. Doesn’t think disc to BRFS closes b/c lower growth, lower margins, high lvg, bad cash and dil overhang.
JBSAY – Largest beef producer in world. No div.
*PRBAY – Small bank. Favorable insurance outlook after Travelers agreement (sold?). Div yield. Decent valuation. Ops with SME clients?
RSRZY – Rossi homebuilding. 2.4% div yield.
*Suzano – Pulp and paper. Seems to get a good review. Prefer packaging to pulp. Relatively small size.
*TBLEY – Utility. 4% div.
Top 6: ABV, BRFS, CPL, TNE, GOL, SUZBY. Next: util (TBLEY, AESAY), banks (PRBAY, ITUB, BDORY) and steel (GGB, SID).