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These Are Analysts' Top Picks to Get In on Brazil's Stock Rally

Vinícius Andrade
These Are Analysts' Top Picks to Get In on Brazil's Stock Rally

(Bloomberg) -- Brazil’s stock market has been a standout this month as peers faltered, surging 14 percent in dollar terms for the world’s best performance.

The jump is driven by predictions that Jair Bolsonaro will win Sunday’s runoff vote for president -- Eurasia Group puts the lawmaker’s chances at 85 percent -- and move to shore up the budget, scrap onerous regulations and restore confidence in an economy emerging from its worst recession in a century.

For investors wondering if there’s still time to get in on the rally, analysts from some of the biggest shops covering Brazil are favoring state-controlled companies, banks and stocks with strong ties to the domestic economy.

“There are still plenty of reasonably priced, high quality businesses in the equity market,” said William Pruett, a Boston-based money manager at Fidelity who runs the company’s $450 million Latin American equities fund. His favorites are companies that benefit from a robust local economy, including financials, airlines, health-care and education stocks.

Here’s a compilation of picks from Bank of America Merrill Lynch, Citigroup Inc., Itau BBA, Banco Santander and UBS Group AG.

Bank of America Merrill Lynch

Cia Energetica de Minas Gerais, Gol Linhas Aereas Inteligentes SA, CVC Brasil Operadora e Agencia de Viagens SA, Magazine Luiza SA, Banco Santander Brasil, Banco do Brasil SA, B3 SA and Petroleo Brasileiro SA are among the bank’s favored stocks in Brazil.


Citigroup has seven Brazilian companies among its Focus List for Latin America. Engie BrasiL Energia SA, Gerdau SA, Iochpe Maxion SA, Petroleo Brasileiro SA, TIM Participacoes SA, Vale SA and Via Varejo SA.

Itau BBA

Itau BBA’s current ’Brazil Buy list’ has Azul SA, Banco do Brasil SA, Banco Bradesco SA, Bradespar SA, Cia Energetica de Minas Gerais, Cia de Saneamento de Minas Gerais, Estacio, Gerdau SA, Petroleo Brasileiro SA and Localiza Rent a Car SA.


Six top picks are Petroleo Brasileiro SA, CVC Brasil Operadora e Agencia de Viagens SA, Energisa SA, Itau Unibanco Holding SA, Iochpe Maxion SA and Rumo. The bank has recently upgraded Brazilian equities to overweight and set a target of 105,000 for the Ibovespa index.


Eight Brazilian stocks are among UBS’s 15 preferred stocks in Latin America: TIM Participacoes SA, Itau Unibanco Holding SA, BB Seguridade Participacoes SA, Fleury SA, Equatorial Energia SA, Banco do Brasil SA.

To contact the reporter on this story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net

To contact the editors responsible for this story: Courtney Dentch at cdentch1@bloomberg.net, Brendan Walsh, Alec D.B. McCabe

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