10 stocks for 2011

PERIODS WHEN INTEREST RATES RISE AND PERSPECTIVES are for lower economic growth are not normally good for stock market performance. And that is precisely the phase the Brazilian economy is entering in 2011. Is it thus time to stay out of the stock market? For 30 analysts from the country’s main banks and brokerages the answer is no if investors take extra care when it comes time to choose. According to the specialists heard by EXAME, the Brazilian stock market still has a handful of attractive stocks. “No major appreciation of Bovespa is expected in coming months, but shares in good companies, with good growth potential, are still available for those willing to look,” says Luiz Fernando Figueiredo, partner at Mauá Sekular and former director at the Central Bank. In a survey with these 30 analysts, EXAME arrived at ten stocks considered market promises (read the survey methodology and the list of consulted professionals at the EXAME.com website).

DENISE DWECK AND MARCELO LOUREIRO

THE BEST INDICATE THE BEST

THE ANALYSTS WITH THE BEST BATTING AVERAGE LAST YEAR INDICATE THEIR FAVORITE STOCKS FOR 2011

THIAGO BRONZATTO

 

THE FIVE PROMINENT ANALYSTS IN THIS REPORT WERE THE BEST IN THE BRAZILIAN MARKET in 2011. In a year in which the Bovespa Index rose only 1%, the stock portfolios indicated by these professionals appreciated at least 17.5%, according to a study conducted by EXAME with the 30 most important brokerages that operate on the BM&F Bovespa. They all know how to get around the uncertainties that surrounded Petrobras' capitalization - the tumultuous process dropped company shares and was the reason behind Ibovespa's very disappointing performance. First on the list, Carlos Firetti, chief analyst at Bradesco Corretora, got it right when he recommended shares in companies geared towards the domestic market, such as the Drogasil pharmacy chain, whose shares appreciated 47% in 2010. Those who followed his tips last year saw gains of 28.5%. In the following pages, the five analysts with the best batting average last year told EXAME their favorite stocks for 2011.

1 Carlos Firetti
CHIEF ANALYST AT BRADESCO CORRETORA

Appreciation of stock portfolio in 2010: 28.5%. Preferred shares for 2011: Cetip, Drogasil and Fleury

“I am optimistic about 2011. The government was right in proposing budget cuts and supporting a monetary policy that controls inflation. Now we need to see how these measures will be put into practice and what their immediate impact will be on the stock market, but an important step has been taken. Although these decisions will slow down the economy, they are welcome. According to our calculations, profits for stock exchange listed companies will rise 25%. Thus, I estimate the Ibovespa will go over 86 000 points in December. Shares in health care companies are among my favorite, because the sector is growing while it is also consolidating. In general, Brazilians have spent more on health. My bet on Cetip has to do with development of the fixed income market, since a higher number of companies are launching more securities to finance themselves.”

 

2 Rodrigo Ferraz
CHIEF ANALYST AT CORRETORA BRASCAN

Appreciation of stock portfolio in 2010: 21%. Preferred shares for 2011: CSN, Usiminas and Vale

“We are in the midst of another cycle of increases in commodity prices, and that is going to give Bovespa a breather, since it is traditionally exposed to the performance of companies in this segment. Vale is one of my biggest bets. Exports to China, which is the company’s largest market, should remain high because the country needs iron ore to expand its infrastructure. Besides Vale, two other shares should be this year’s surprises: CSN and Usiminas. These companies were disdained by investors in 2010 because no one knew how the global demand for steel would behave. But steel inventories are diminishing as developed nations recover, and that will benefit these companies."

 

3 Marco Saravalle
ANALYST AT CORRETORA COINVALORES

Appreciation of stock portfolio in 2010: 20.9%. Preferred shares for 2011: CCR, Lojas Renner and Vale

“Economic growth should not be as strong this year as it was in 2010, but good macroeconomic conditions experienced by Brazil will continue. The process of increasing class C and D income and consumption will continue. I also expect more investment in infrastructure - a country cannot grow at 4% or 5% per year without developing its ports, highways and airports. So, as we did last year, we continue recommending the purchase of stocks tied to consumption and infrastructure sectors. One change for 2011 is the indication of commodity producer stocks because the global demand for metals and agricultural products is high."

4 Oswaldo Telles
CHIEF ANALYST AT CORRETORA BANIF

Appreciation of stock portfolio in 2010: 19.8%. Preferred shares for 2011: Lojas Americanas, PDG Realty and Vale

“We are experiencing a good moment for new investments in stock. Ibovespa’s fall at the beginning of the year left some stocks cheap. I remain optimistic with civil construction because there is great demand for properties in the country, at every income level. Shares of these companies fell a lot in February, after cuts were announced in the Minha Casa, Minha Vida program. There was a clear exaggeration. There are also opportunities in the consumer sector. The economy should grow less, but it will grow, and that should continue favoring consumption. I like Lojas Americanas because the company has a solid management and has been presenting good results.”

 

5 Kelly Trentin
CHIEF ANALYST AT CORRETORA SPINELLI

“The situation of developed countries improved a little over recent months, but there are still focal points of tension. Rolling the debt in Portugal, Ireland, Greece and Spain will be motive for stress in the market over coming months. I think the shares least affected by volatility will be those in companies geared towards the domestic market. CCR is one highlight. The company has a good profit margin, profitable projects, such as the São Paulo Beltway, and it also readjusts its tariffs to inflation, which is protection against rises in prices. I also like Gol a lot. The number of people who can afford to travel is growing and that should continue driving air ticket sales. My other big bet for 2011 is Banrisul Bank, which has been increasing its profit margins and the size of its credit portfolio above market averages."

 

 

3 FORMULAS FOR THE YEAR

Risks for investors have increased this year, which is why advice from specialists is a little more conservative. Now is the time to protect part of one’s wealth from increasing inflation and to take advantage of high returns from CDs. “Stock markets and real estate are investments that are only worthwhile for those with a more daring profile. Otherwise, it is best to concentrate almost everything in fixed income," says Rodrigo Menon, partner at the Beta Advisors consultancy, geared towards high income clients. He and four other financial advisors indicated three portfolios for 2011, for investors with different risk profiles.

THIAGO BRONZATTO