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Recommended portfolio: Vale and Gerdau are the most suitable for December

At the end of the year, Brazil is facing strong inflationary pressure, which has spread to different sectors of the economy. The IPCA, which should remain above 10% in the last 12 months, experts point out, should provoke a new rise in expectations for 2022.

According to last Monday’s Focus bulletin (29), experts project inflation for 2021 at 10.15%, well above the 3.75% target with a tolerance margin of 1.5 percentage points more or for less.

Ativa Investimentos highlights the economists’ projections are also due to the government’s willingness to keep the country’s fiscal issue within a reasonable condition, ie, honoring the spending ceiling as well as advancing with structural reforms.

With this, banks, brokers and analysis houses proposed a recommended portfolio for December focused on diversification, because, “at this moment, [essa estratégia] becomes a key player in the portfolio’s performance,” say analysts at Inter Research.

Recommended portfolio

O CNN Brasil Business listened to analysis houses, banks and brokerages to understand which are the most suitable stocks for the month of December. To arrive at the list, the surveys of Órama, XP, Genial Investimentos, CM Capital, Toro, Benndorf, Warren, Guide, Ativa, Planner, Safra, Inter Research, Investmind and NuInvest were counted.

And, among all the companies listed on the stock exchange, mining company Vale was the most recommended stock. Analysts at Banco Safra explained that this past month, despite lower iron ore prices and greater uncertainty about the level of growth in China – as the country is Vale’s main customer -, the company should continue to generate a stronger cash flow and maintain attractive levels of shareholder remuneration.

Just below were Gerdau, with six recommendations, and Banco do Brasil, with five nominations.

See below what analysts commented on the eight most prominent shares for this month:

Vale

Action: VALE3

Comment: Mario Roberto Mariante, Victor Luiz de Figueiredo Martins and Ricardo Tadeu Martins, from Planner Corretora

We included Vale in the portfolio at a time when the mining sector is still under pressure, mainly from the side of China, which took decisions to control steel production and affected the entire mining sector. Furthermore, after the peak reached months ago, above US$ 200 a ton, a retreat was already expected.

The company’s consolidated figures for the 3rd quarter reflected an increase in the production of iron ore and coal, but they were also weighed down by the sharp drop in iron ore prices, with 62% iron content, leading to a revision in sales production. of high silica iron ore products.

Vale’s iron ore fines production totaled 89.4 Mt in 2Q21, 18.1% higher than in the 2nd quarter, as a result of seasonally better weather conditions in the Northern System, increasing the performance of Serra Norte and S11D. Vale’s pellet production totaled 8.3 Mt in 3Q21, in line with the 2nd quarter, still restricted to pellet feed availability in Itabira and Brucutu.

In the 3rd quarter, net revenue, Ebitda and net income were lower than in the 2nd quarter, which contributed to the devaluation of the company’s shares, which came from an upward curve in ore prices and a very positive expectation of results .

The iron ore market has been recovering in prices, but there are uncertainties regarding the behavior of global demand and international prices, especially with the new threat of the coronavirus. Even so, we see Vale’s action as a good opportunity right now.

Gerdau

Action: GGB4

Comment: Gabriela Cortez, Rafaela Vitória, Breno Francis, Rafael Winalda, Gustavo Alves, Fernando Urbano, Vitor Carvalho and Henrique Abras, from Inter Research

With exposure to different segments of the steel chain and also to different geographies, Gerdau is well positioned to seize the opportunities and overcome the challenges that we expect for the coming year.

In the longs segment, in 2020 we saw market-driven demand tingle with people renovating their homes. In the course of 2021, it was the turn of the developers with the launches and important advances in their deliveries.

We expected positive results from Gerdau for the 3rd quarter according to the preliminary report, but the company managed to surpass our estimates by far, with revenues 13% higher than expected.

However, the highlight was due to Ebitda, which closed at R$ 7 billion, 19% above the previous quarter and 34% higher than our projections, the result not only of a better top-line, but also of strict control of costs and expenses. With more than satisfactory results, the company announced earnings in the total amount of R$2.8 billion, totaling R$1.62 per share.

Bank of Brazil

Action: BBAS3

Comment: Gabriela Cortez, Rafaela Vitória, Breno Francis, Rafael Winalda, Gustavo Alves, Fernando Urbano, Vitor Carvalho and Henrique Abras, from Inter Research

We maintain our recommendation for Banco do Brasil (BBAS3), which despite the perception of risk of political interference in the Bank, its balance sheet remains solid and its latest results surprised our expectations and those of the market, bringing record net income, benefiting from a strong result with treasury and positive adjustments at Previ.

Even if we don’t count on these effects for the next quarters, we expect 2021 to come in line with the reported guidance and bring an ROE of around 14%.

We emphasize the good quality of the bank’s loan portfolio, with low default levels and lines such as agribusiness that showed strong growth.

Petrobras

Action: PETR4

Comment: Hugo Carone, from NuInvest

Petrobras is one of the largest oil and gas producers in the world, mainly dedicated to exploration and production, refining, power generation and commercialization. It has the expertise in deep and ultra-deep water exploration and production as a result of nearly 50 years of development in Brazilian offshore basins, making it the world leader in this segment.

The company’s controlling block is made up of the Federal Union, BNDES and BNDESPar, which hold 36.75% of the total shares and 50.5% of the voting shares. Of the remaining balance of shares, 21.6% are with Brazilians on the B3, 22.12% with foreigners on the B3 and 19.53% on the New York Stock Exchange (ADRs).

Rede D’Or

Action: RDOR3

Comment: Investments Guide

Rede D’Or is the leader in the Brazilian private hospital market and in 2Q21 had 9,611 total beds, with 91% of the operational beds distributed in 58 hospitals, in addition to having the largest integrated network of cancer treatment in the country, according to the company itself.

The group reported a strong evolution of the top-line, due to the inorganic growth and increase in the bed occupancy rate. In the quarter, there was a reduction in the number of admissions of Covid-19, but, on the other hand, there was an increase in the occupancy rate (78.4% in 3Q21 vs. 75% in 3Q20) due to the resumption of elective procedures.

Adjusted EBITDA was R$1.5 billion in the quarter, an increase of 33.6% YoY. The adjusted EBITDA margin decreased 1.2 pp YoY, reaching 28.5%, mainly due to the increase in administrative expenses.

The company continues its fast pace of M&A and, during 3Q21, four acquisitions were concluded (Nossa Senhora das Neves and Clim in Paraíba, Proncor in Mato Grosso do Sul, and Santa Emília in Bahia) and three acquisitions are still pending approval. (Hospital Novo Atibaia and Hospital Santa Isabel, in São Paulo and Hospital Aeroporto in Bahia).

We remain optimistic with Rede D’Or, which should continue to deliver solid results and demonstrate resilience due to its strength and the sector in which it operates.

Bradesco

Action: BBDC4

Comment: Phillip Dyon Flores Pereira Soares da Órama Investments

Bradesco is one of the largest banks in this country, with its main business in granting credit, but also in financial services, investment banking and insurance. The bank has reasonably stable economics, with predictability in short-term numbers.

We chose to place it in our portfolio primarily because of the relevance of the credit granting business in the business, especially with regard to large corporate clients. This will be one of the last businesses to be attacked by fintechs, in addition to benefiting from a situational factor that is the high Selic rate.

The health insurance business should also benefit from these same components. We believe that some of the big Brazilian banks were extremely conservative in their post-covid provisioning, and Bradesco was one of them. We expect a reversal of these provisions in the next results, which is another situational factor that should improve the bank’s numbers.

streak drugasil

Action: RADL4

Comment: Investmind

The company is the largest pharmacy chain in Brazil, operating in a very stable segment and with a low correlation with GDP. In addition, the company has been delivering strong growth in recent years with the opening of new stores and managing to report profitability well above the average.

The company has also been developing and maturing its digital channel, which allows for gains in scale and avoids the threat of new entrants in this segment. It is an operation of excellence and a management that knows the business, with the founding families of Raia and Drogasil forming a shareholders’ agreement.

This month its results for the 3rd quarter were announced, once again we saw consistent results, with an increase in the number of stores, expansion of its digital business, but with a drop in margins. Even so, our opinion on the company remains, where we consider it to be a great defensive option for the portfolio and that it has a good long-term growth prospect.

Renner stores

Action: LREN3

Comment: Gabriela Cortez, Rafaela Vitória, Breno Francis, Rafael Winalda, Gustavo Alves, Fernando Urbano, Vitor Carvalho and Henrique Abras, from Inter Research

Like any retailer, the impact of the pandemic on the company’s results was evident. As we emphasized, the drop in sales in physical stores and the alternative to the online channel was a standard scenario in the sector – negatively impacting margins.

However, Lojas Renner is one of the players that has the most advanced logistical structure in the country and this meant that costs were impacted to a lesser degree compared to competitors. With the resumption of the flow of people in the malls, growth in total sales and margins is expected, signaling that the company is once again experiencing a structure of pre-Covid-19 historical levels.

Furthermore, Lojas Renner carried out a share offering that reinforced cash by R$4 billion, and despite the purchase of Repass, a good part of the funds is still intact.

This resource will be destined for inorganic growth, that is, via acquisitions, and internal expansion projects. In our view, the company probably targets a relevant company in the digital scenario, as we believe that Lojas Renner has relevant representation in relation to physical stores. Despite the sector experiencing a troubled time due to inflation and high interest rates, in addition to news about new variants, the clothing segment continues to stand out in 2021.

*With information from Reuters

Reference: CNN Brasil

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