O JPMorgan listed 21 favorite stocks from Latin America to face the second semester. Of these, 13 are Brazilian.
According to the bank, Brazil is trading at the cheapest valuations in 20 years, at 6 times the 12-month price on earnings (PE), or 2.6 times below the 10-year average.
At the same time, recalls JP, profits have been recovering, now seen at 18% for 2022 (was -15% at the beginning of the year), although remaining in the negative field for 2023.
“We continue to prefer exposure in Brazil through commodities and finance. On the commodities front, we would be more exposed to materials — OK (VALE3), Gerdau (GGBR4) — than energy, as the noise in the Petrobras (PETR4) could increase significantly closer to the election”, he says.
In the financial area, the JPMorgan is positioned among the incumbents — Itau (ITUB4) and Bradesco (BBDC4) — which, in the bank’s opinion, are more prepared to face an eventual bad credit cycle, while the financial margin should improve.
“We also like utilities, which are high-dividend players,” he argues.
O JPMorgan also prefers early exposure to those stocks that benefit from lower rates, such as shopping malls, given appreciation, corporate activity in the sector and strong reopening.
What to expect from the second half?
In the second semester, more uncertainties are expected, due to the elections. In addition, the JPMorgan says that it is expected that the inflation reach your peak.
“While Squid is well ahead in the polls, the former may gain ground as inflation begins to fall and the reopening of fuel employment (already happening). At this point, there are important questions about the direction of the country’s economic policy. EN and who will run it. At the same time, there are fears that Bolsonaro call the election a fraud if the result is not necessarily your way”, he says.
See the papers selected by the bank:
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