RIO DE JANEIRO, BRAZIL – Following the nearly 30 percent drop in Brazil’s main stock market index in the first quarter, large company stocks are trading at lower prices. The question is what to buy. According to investor Guilherme Affonso Ferreira, the recommendation for the small investor is “not to invent”.
“Itaú and Lojas Renner shares are being traded at a discount. That doesn’t mean they won’t drop any further, but in three years investors will realize that buying them was worth it”, he says.
Investor Roberto Lombardi agrees. “No need to look for a bargain.” He recalls that, in the last major crisis, he bought Prumo’s shares (LLX at the time) which had dropped by 90 percent.
“At the time of the turnaround, when I was going to collect the profits, the private equity fund that bought LLX made a takeover [stock] offer. I learned that it is important to see who is behind the shares,” he says.
Both investors, therefore, are optimistic that some good stocks will rebound and recommend that novice investors not give up, despite this year’s losses. The B3 has today 2.24 million individual investors, the highest level in history.
“Every crisis has an end, the rebound may not be as quick, but it will happen. The point is that the drop is for everyone and the rebound is selective. It’s going to happen at different times for investors and it may not even happen for some,” Affonso Ferreira says.
Hence, the relevance of selectivity. Lombardi says exposure to commodities increased – Vale and Usiminas -, shopping, retail and infrastructure, “which before had no appealing prices to enter,” in addition to the B3 itself.
Affonso Ferreira says he analyzes shares for what he sees on a daily basis. “The drugstore chains and supermarkets are filled with people,” he says. Another interesting sector – though less obvious – is banks.
“The fintechs that scared the banks should stop for a while. Furthermore, there’s a return to the companies’ race for credit, which should yield good returns for the banks,” Ferreira says.
Source: Exame