10 stocks to invest in July, according to BTG

O BTG Pactual included the actions of WEG (WEGE3), locate (RENT3) and Renner (LREN3) among the recommendations for July.

The changes take into account the liquidity of the papers, the attractive price and the “strong history of execution” of the companies, says the bank in a report signed by Carlos Sequeira and Osni Carfi.

For BTG, the recent liquidation of WEG, which has accumulated a drop of more than 15% this year, is a “good gateway to a business with strong fundamentals, defensive characteristics and secular trends”.

Localiza, according to BTG, should benefit from the merger with Unidas. “A more ‘normalized’ automobile market can create good opportunities to expand and renew its fleet under better conditions”, he comments.

The bank’s analysts maintain retail exposure with Renner (LREN3). “Premium operating performance and execution should benefit from consumer trade-down and market share gains over smaller peers,” he says.

The stock trades at a multiple of 14 times the 2023 P/E price.

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state-owned

BTG says it added Petrobras (PETR4) and know (SBSP3) that are, in the bank’s assessment, impacted by the political environment. For analysts at the institution, the two stocks are too “cheap to be ignored”.

“Petrobras is a complex case as its pricing policy is at the center of intense political debate, but a highly attractive valuation (2x 2022E EV/Ebitda) already largely prices political risks, while strong dividend payouts provide extra support” .

Sabesp, on the other hand, traded at 0.64x EV/RAB (10x P/E), has an optimistic outlook due to the possibility of privatization in a possible new management, says BTG.

What comes out of the wallet

BTG reduced exposure to banks with the withdrawal of Itaú Unibanco (ITUB4), but maintaining Banco do Brasil (BBSA4) – which, according to the institution, has a solid credit portfolio and is “very cheap”.

The bank withdrew Arezzo (ARZZ3) and multiplan (MULT3).

Still excluded from the portfolio root (ROOT4), due to the reduction of the federal tax on fuels – which makes ethanol less competitive in relation to gasoline, says BTG.

BTG also withdrew Locaweb (LWSA3) to favor more liquid stocks, although it maintains the role in the portfolio of small caps.

“We maintain our exposure to the light commodities and livestock businesses, where Brazil has an advantage. SLC Agrícola (SLCE3) is our favorite light commodity player, while Minerva (BEEF3) is the one that gains the most from the reduction of cattle costs in Brazil”.

BTG also kept OK (VALE3) in the portfolio, in view of strong dividends and the share buyback program.

The bank is still Totvs (TOTS3), because of “good growth, profitable business, inflation protection and attractive valuation”.

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See BTG’s recommendations for July

Disclaimer

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