Brazil’s market in election year: 5 stocks that can do well in 2022, according to experts

RIO DE JANEIRO, BRAZIL –  The unstable scenario is not expected to let up in 2022, mainly because it will be a presidential election year. However, this does not mean that there are no opportunities on investors’ radar.

According to XP Investimentos, there are 3 common features among companies that should stand out this year.

In general, these are companies linked to commodities, seen as a good protection against inflation and dollar hikes; or with secular growth records, protected against the more challenging macroeconomic scenario.

Experts also cite companies whose shares have recently dropped without any specific feature of their business or sector. In other words, with an unjustified devaluation in their assets, which may indicate that they are underpriced.

PETRORIO (PRIO3)

According to Top Gain analyst Sidney Lima, PetroRio (PRIO3) shares may perform well during the year, given that the company is linked to oil and this commodity may ultimately benefit from the “post-pandemic” economic upturn.

“Another fact that draws my attention is that the company is adopting a more aggressive business style, particularly in terms of acquisitions, which tends to benefit its financial result, by increasing production, and subsequently increasing the company’s revenue, which includes an interesting proportion of dollarized revenue,” he said.

Lima also points out that PetroRio should not be affected by any political interference next year. “And in 2022, it is worth noting that it will be an election year, and Petrobras, however excellent it may be, navigates on uncertain waters through its political influence,” he said.

PETROBRAS (PETR3 and PETR4)

According to GTI partner Rodrigo Glatt, Petrobras, which is also linked to oil, should stand out this year, as it should achieve good results and, in parallel, pay excellent dividends to shareholders, above the basic interest rate (SELIC).

“I would highlight Petrobras in a scenario of very strong cash generation and potentially paying dividends above 20% in the coming years,” Glatt said.

BANCO DO BRASIL (BBAS3) and ITAÚ UNIBANCO (ITUB3 and ITUB4)

According to Axia Investing partner Ricardo Oliboni, for long-term investors, the shares of banks such as Banco do Brasil and Itaú Unibanco may offer great buying opportunities this year.

For XP Investimentos, Banco do Brasil is the top choice in a sector that will face a more challenging year in 2022, with potential regulatory interventions and more aggressive competition, given the advance of Open Finance and fintechs.

“Which may impact the credit market and gain momentum on the investment, insurance, pension, foreign exchange and payroll account fronts,” XP said in a note.

BRASILAGRO (AGRO3)

XP also highlights BrasilAgro for 2022. The company is among Brazil’s largest in quantity of arable land and focused on the acquisition, development, exploration and commercialization of rural properties with agricultural suitability.

According to the financial market company, in the grain market, the outlook is for a strong soybean and corn crop in Brazil.

“Considering factors such as the greater operational heterogeneity of each company and improved productivity, we may see mixed results. The U.S. crop and China’s appetite should cause volatility in the medium term,” XP reported in a note.