In the second month of the year, the Ibovespa recorded a drop of 7.49% in February, ending below 105 thousand points. According to specialists, the expectations of higher interest rates in the United States and the country’s fiscal uncertainties influenced the behavior of the market in the month, as investors are still cautious with the next steps of the new government.
For the month of March, the CNN compiled the most recommended stocks by some of the main banks and brokerages in Brazil, which can yield dividends despite the unstable scenario.
The most recommended asset was Engie. The company’s share had five recommendations, followed by Vale and Itaú Unibanco, with four recommendations each. See the full portfolio below:
According to market analysts, one of the attention factors is the new fiscal framework, which should be discussed this month. The government’s criticisms of the Central Bank and the tax reform are also matters closely watched by the market.
On the international scene, expectations revolve around US interest rates.
Action : EGIE3
Comment : Terra Investimentos
Engie is the largest private electricity producer in Brazil, with its own installed capacity of 10,791MW in 72 plants, which represents around 6% of the country’s capacity. The company has almost 90% of its installed capacity in the country coming from renewable sources with low GHG emissions, such as hydroelectric, wind, solar and biomass plants.
With the acquisition of TAG, ENGIE now also owns the most extensive natural gas transport network in the country, with 4,500 km, which crosses 10 states and 191 municipalities. We have a positive outlook for 2023, bearing in mind the advancement of transmission projects and the new energy sales contracts signed by the company, which totaled 142 average MW between 2022 and 2027.
Action : VALE3
Comment : BTG Pactual
The stock remains our preferred name for exposure to the reopening of the Chinese economy. As we move into 2023, we expect economic activity to gradually recover as the government eases restrictions and the housing market improves (“too big to fail”).
from a perspective bottom upits operating momentum should continue to recover (from write-downs) as production and costs (for its iron ore and base metals divisions) should improve in the coming quarters.
We welcome the addition of a reference shareholder (Cosan) to Vale’s Board of Directors and see the potential monetization of the base metals division as a catalyst for generating value for long-term investors.
In our opinion, management remains highly disciplined in its capital allocation strategy (very small growth capex) – and we estimate a yield of 13-15% for 2023, including share repurchases.
Action : ITUB4
Comment : XP
In February, the shares of Itaú Unibanco (ITUB4) rose 1.4%, surpassing the Ibov and the IFNC (-6.7% and -5.0% in the same period, respectively). We attribute this appreciation to a robust result in 2022 (despite the impact of Americanas) and the release of healthy guidance for 2023.
We reiterate that Itaú continues to operate more efficiently among the major Brazilian banks, which puts it in a good position to navigate the challenging macroeconomic scenario that is to come.
Furthermore, we see the following differentials: i) we see Itaú with a very healthy coverage ratio (and above the historical average) while keeping default rates under control; ii) it has good exposure to consumer credit lines, which are growing rapidly; iii) solid history of M&As and partnerships; iv) attractive valuation. We have a Buy recommendation and target price of BRL 34/share for 2023.
Source: CNN Brasil
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