O CNN Brazil Business compiled indications from nine brokerage houses and banks for the composition of the recommended stock portfolio for December. Órama, XP, Ativa, Warren, Genial, Terra Investimentos, Banco do Brasil, BTG Pactual and Santander participated in the survey.
THE OK (VALUE3) it’s the Itaú Unibanco (ITUB4) continued to be the most recommended actions in December, with seven and six suggestions respectively. next are Eletrobras (ELET3) with five recommendations and Assaí (ASAI3) with four nominations.
On the radar in December
For this month, brokerages are more cautious for two main reasons: the new government’s aggressive proposal for fiscal expansion and the uncertainties surrounding the new finance minister.
“We recognize that a positive result in the negotiations of the constitutional amendment that will open budgetary space could boost stock prices. However, if something close to what was proposed by the new government is approved, the fall in shares will continue, especially if the new Minister of Finance is not pleasant to the market”, points out BTG Pactual.
Genial Investimentos points out that, in November, the earnings season was below expectations with companies feeling the effects of the restrictive monetary policy, inflation data proving to be more positive, and the level of economic activity cooling down.
With this scenario in mind, many brokerage houses and banks opted to reduce exposure to the domestic market and seek opportunities in more diversified compositions among exporting companies, within more perennial sectors and with less leverage.
“In our opinion, as the foreign market is marginally more positive, we believe that a simple definition of the PEC of the transition and the economic team could contribute to an improvement in asset prices even if the market does not have a positive final assessment for either of the two themes”, says Genial Investimentos.
Highlights for the month
What analysts said about the top stocks for December:
OK
Ticker: VOUCH3
Comment: Terra Investimentos
Terra points out, in its recommendation, that iron ore in China should remain volatile, while the Asian giant’s government continues to analyze stimulus policies that tend to increase demand for the product.
Even so, the expectation is for steel demand to return to historic levels. For the consultancy, the risk factor remains associated with restrictions in the fight against Covid and signs of interference in Taiwan.
“The company continues to deliver strong operating results despite the latest production revisions. Another long-term factor is the war between Russia and Ukraine, which in the long term should generate greater demand for metals to replace war weapons,” says the report.
Iron ore is a commodity that has been widely used in the reconstruction of countries affected by wars in the past. Stipulated target price (12 months): BRL 96.00.
Itaú Unibanco
Ticker: ITUB4
Comment: BTG Pactual
BTG points out that Itaú outperformed its private peers in the third quarter’s results and predicts that the company will continue to do so in the coming quarters, reinforcing that it really deserves the “premium” seal in the financial sector.
“Itau seems to be outperforming its private peers pretty much everywhere you look. It has better managed its credit and ALM portfolio, growing rates and insurance at a faster pace – open platforms, new teams/partnership model – and showing that CEO Milton Maluhy, has full control of the company”.
Thus, Itaú continues to be the main choice among banks in Brazil, according to BTG. And, after falling 15% last month and trading at 7.0x P/L 23, the institution believes that the valuation “looks attractive”.
Assai
Ticker: ASAI3
Comment: Santander
Assaí is the second largest food retailer in Brazil and the only wholesale listed in Brazil. The company has more than 190 stores and is present in 23 states in the country, with a strong history of opening stores in the last 5 years. Currently, Assaí has 10 distribution centers and 11 regional offices to serve all stores.
As drivers, the bank highlights the positive results throughout 2022/2023; exposure to a market segment that should benefit from the challenging macroeconomic scenario; and the success of the company’s expansion plan.
How risks are the execution of the store opening strategy; the worse than expected results in the conversion of Extra Hiper stores; and the governance risk of corporate actions conducted by Casino.
Source: CNN Brasil
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