Ambev NYSE: ABEV Stock Offers 3X Potential (Stock To Buy)
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- เผยแพร่เมื่อ 2 ส.ค. 2024
- Ambev Stock, NYSE: ABEV, offers an interesting risk and reward situation as the business keeps producing cash flows while the whole country sentiment is ugly.
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0:00 ABEV Stock
0:26 Business
6:22 Financials
7:54 Risk And Reward
Ambev is one of my favourite: great brands, incredible market share in its markets, 5 years ROIC of 16.64%, 5 years net margin of 19%, positive cash position, the safest dividend... now at a discount (6.98 ev/ebitda compared to a 5ys average of 10.68). Big BUY in my opinion.
Thanks for sharing!
ABEV doesn’t deliver the growth promised in over 10 years in Brazil. As a Brazilian, the stock is overpriced for what it delivers. It also faces constant year to year competition to other brands such as Heineken locally there and it struggles to keep market share in there because of being too big it moves too slow…
Also, this dividend has never been so high! For ABEV standard historically the yield is between 2.5%-4% and even that is very volatile as dividends in Brazil are not every quarter and predictable like here in the US. The stock is cheap for US standards, but once you go to actual BRL it’s not that cheap and the historical data doesn’t back that analysis up… there might be upside there in BRL, but in dollar with the currency devaluation it may not have that much.
Not only that… I think there’s a lot of tax subsidies that it takes advantages of in there too… as soon as those are removed you’d could expect some impact on profitability as well… not that it will become not profitable, just less than it is today and that would/could hit hard the stock price…
Thanks for the insights! For me, the thing that's holding me back is the inconsistent dividend yield, and it's 1 time per year. I can see myself looking at it again once US interest rates go down and undervalued stocks go up. But right now, there's plenty of deep value non-tech choices available in the US market.
ABEV is not for me. Analyst Scorecard on FG says the guidance is bad and the analysts are almost always wrong.
Thanks for sharing
I'm a Brazilian securities analyst. ABEV looks cheap from an outside perspective, but there's a lot of companies on Brazilian market that are WAY less expensive.
We are talking about good utilities companies or great big Brazilian banks with a PE lower than 5 and negotiating under book value (for example: BBAS3, CSMG3, SAPR3, TRPL4, CLSC3, RANI3, PETR4, GOAU4...) There's also crazy opportunities in smallcaps. In this scenario, why anyone would buy a riskier stock like ABEV with way higher multiples?
I wouldn't analize a bank with pe but returning to your comments. Analying small caps from a foreing country is very difficult. I guess you have a big edge over foreing investors.
I like the companies you mentioned, but how you consider that Ambev (which generates tons of cash and sells worldwide) is riskier than GOAU4 which does not do good result and will continue to face chinese cheap steel (especially with chinese banking system getting worse at the moment) ? (not even mentioning PETR4 and political interferences)
@@mrhulls yes, this is my local market, and we have a say here that "Brazil is not for amateurs". Things are "complicated". But Brazilian banks are the most profitable in the world (Itaú, Banco do Brasil, Bradesco, Santander Brasil). Here it makes a lot of sense to look at the PE and Price/book ratios, even at banks. Some Brazilian stocks listed in the US that are great companies at fair prices: PBR, GGB, CIG, BDORY... I like ABEV, but not at these prices
@@Rrroohh It's just margin of safety. Gerdau and Petrobras are just very cheap, so the risk becomes low buying at current prices.
Thanks for sharing
Sven, maybe a video on Pernod Riccard? Also good diversification outside US
Hi Sven, great video again! Thank you for sharing your view on this. I was wandering what your thoughts are on Neste Oyj and Match Group. They seem to be pretty undervalued. Just a tip for a next analysis. Take care. Maros
Thanks for sharing
Hi Sven. Thanks for this video I always enjoy and learn a lot from your analysis.
since you asked, I suggest three companies. Ticker symbols: O, EPD and EKT!
The first two are good dividend stocks, EPD in particular. O has a good business model even if it is Real Estate. EKT looks like a good compounder, not yet recognized by the market, although the dividend is not that attractive. I'm following them all but have not yet invested in any yet.
Thanks a lot again, hope to be helpful!
Thanks for sharing!
Very interesting company Sven! It looks like a buy in brazilian real terms. Unfortunately it doesn't fit my portofolio due to currency risk. In the years the brazilian real keep depreciating against the dollar and the euro, that's why the ADR performance as been horrible! I'm not smart enought to know if the currency trend will change..
Make currency risk work for you. USD is very strong now. Which means, you should in fact be buying foreign stocks now to reap a windfall of dividends in the future. I’m not American and bought a ton of US stocks back in the day and so glad I did.
But I have to still buy US stocks today because good buys are simply limited in the world. It is Brazilian money though but heck, as long as Brazil doesn’t do an Argentina it’s ok. I bought a little Ambev just now :)
Thanks for sharing
Thanks for covering 🤓😎 I have been looking at it too recently. U have taught us well😁 Another one with a South African link so easy for me to have background. Just like Prosus and Naspers. ABEV and SAB Miller 🙂 Brands I have been familiar with. Thanks for your teachings
Glad it was helpful!
I already initiated a position last week. Thank you for the video.
Thanks for sharing
Good day, Sven
Staying on the topic of brasilian companies, what is your take on Petrobras?
Hey I saw in the past u covered Nutrient, it appears to be going to be in a down part of the cycle again. Could an update video be interesting?
I have updated on my research platform, will see if I'll make a vid
Great video, Sven! I'm also a Brazilian, I don't have the stock, but one thing I'll say, it won't stop growing the profits soon because people over here are consuming A LOT of their products. Even though some competition has entered, it's nothing to worry about and I don't think it will be.
Thanks for sharing
Thanks for the insight Sven! My main concern despite promising balance sheet is that it doesn't really have much of a moat, alcohol business is tough since there is so much competition and ABEV doesn't really hold any competitive advantage over other producers.
Thanks for sharing
DEO, ABEV, have crushed. maybe people cut drink budget in this recession
People never cut drink budget for beer. For expensive wine and liquors yes, but for a beer can that cost cents, it doesn´t happen.
Thanks for sharing
Hey Master, what about Chinese utilities like China Water Affairs Group Ltd? Also great value assets?
I would also be interested in that. I owned it back in 2021 and made good money.
Debt to equity 122%
Depends on the government
thanks Sven great review as always, seems like a dividend play against U.S. market with limited growth here. Definitely on watch list
Thanks for sharing!
Hi Sven one thing I thought u might find interesting is they compete with quilmes in Argentina which has 46% market share there so bit difficult competition for Argentina Altho the geographic diversification doesn’t make it too significant but thought it would be something to add to your research. Thanks for the video👍👍
Thanks for sharing
A proposito di valore , il valore che mi producono i minatori di metalli preziosi e’ grande e ne produrranno ancora di piu’ il vero value Investing e’ questo ti arrampichi su gli specchi si sente il rumore sveglia
Thanks for sharing
Could be something, but I wonder if gen-z is even drinking beer. Youngsters will probably be all in on easy spirits. Pernod Ricard, -35% 1y looks kind of interesting
Thanks for sharing
didn´t expect this to show up here :D not really a well-known high-flying stock. Been holding Ambev for 9months or so already, same investment thesis as you, pretty good value stock with interesting risk/reward. Also a good way to diversify away from the "main" markets (USA/EU and to a lesser degree china)
Thanks for sharing!
interesting, worth to take a look.. good return on equity
It is!
If beer sales are steady and increasing in Brazil, economic stability and growth must also be happening.
thanks for sharing
Hello Sven, from a longterm viewer:
Thank you a lot for your work and for being a rational pol in these emotional times.
If you take subscriber wishes:
I would love for you to do an update on alibaba with the competitive situation with PDD and JD
Thank you and good night
Torro
Thanks for suggesting
Hi Sven! Ambev is going through a challenge due to the economic crisis in Argentina and the drop in beer consumption in some of its markets, such as Canada. It's an ok company, which hasn't been growing much and should distribute 5/6% of DY, but here in Brasil we have other more interesting ones.
Thanks for sharing
Hi Sven, always a great video. Have you looked at the brazilian company Gerdau SA (NYSE:GGB)? Steel maker with strong liquidity, 7% dividend and significant exposure to USA.
Steel cycle is global
You seem to like relatively smaller non-U.S. businesses that seem undervalued with some reason to expect growth, maybe even significant growth? If they do grow, it might be a good chance at significant gains. Of course, no one really knows the future.
Nobody knows
I liked your video! Can you please suggest a good way of starting to invest in cryptocurrency. What do you think? Should we learn from successful traders and copy them rather than taking risks with our own money and getting too emotional?
Which signal do you guys trade
Trading has been going well for me. Each day, I enjoy watching videos and reading appreciation posts of trades profit. It brings me joy to see others happy.
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Wow, it feel so relaxing to see my broke talked about here, I thought I'm the only one that knows Ms Audrey Arlo,| guess her good works speaks for her now, she has build a good Legacy for herself
She is my family's personal broker and also a personal broker in many families I'm from United States, she's a Licensed broker and a FINRA AGENT in United States.
Finally a day where it is fun being a value investor!
:-)
Im ball deeps in Ambev, down like 25%, but keep buying each week.
Don’t end up castrada 😅
Thanks for sharing
i like investing in Brazil etf (EWZ) than in a single stock from a market I don't know too well - 7.4% dividend, plus diversification, good growth prospects for the future! ;)
Brazilian here, EWZ is heavily concentrated in a few commodity companies and banks. If this is your goal then ok, but for me as a brazilian EWZ is a very bad index to invest into.
Thanks for sharing
will you research this further or perhaps buy it?
Will see if ill write a report for platform
as a pure financial valuation alone, ABEV is grossly underpriced. even if the price were $4/share, it still has an 80% chance to make you money. but...
As you say, but…
I think you will like Itaú, largest Bank in latin America. NYSE: Itub
Other suggestions: ENGIY - utilities, BDORY - Bank, TIMB - Telecom.
Thanks for sharing
In my country (Bolivia), AMBEV is the dominant force in the beer industry. They’re so big that the they have an unusual supplier power, paying their suppliers in 180 days. No other beer company comes even close to them.
Thanks for sharing
What about Petrobras? A major with massive discount and generous dividends
Dividend isn't safe and the value gap is probably going to stay forever as it acts as a government pet.
I bought some when it was close to half it's current price, which was a good deal. But now? Don't know if I would add any.
@@ironbooze2937 safe enough for me. Min 4% yield guaranteed at current price if WTI > 40$ and gross debt < 60 G$ (read their div policy). Current yield around 12% with potential upside if extra div. PER of 4, 40% GPM, 30% ROE etc. Keep investing in your SP etf at 1% yield, sucker!
No idea, havent analyzed
i think that its interesting because we will see 3usd for sure one day but the growth story of the stoxk seems compromised.
why a stock is loosing value since 2012…
i see growth in retained earnings but the real growth wich comes from cash flow from operations show no increases (discount inflation and its worth)
i see that stock as a bond..
i learnt the hard way that its better to buy expensive stocks than cheap ones…the only challenge is to not overpay.
Thanks for sharing
Brazil does not levy withholding tax on dividends, correct? But since this is a US ADR, would US withholding tax be due or does it remain at 0%?
all ADRs fall under US withholding tax
Good question ... I've yet to figure that one out.
15% Now, since a law change in 2023
@@michaelfishkop779 No, this cannot apply in general: In the past, I have paid 15% withholding tax on dividends from a Russian share (plus fee) and 0% on a Colombian share.
@@carlosparra9527 This law does not appear to apply to US05968L1026. 🤔
Hi Sven,
could you check also briefly LUV /Southwest airls /stock ? It is also on lower levels and has been hit by covid . Anyway if they will return to pre pandemic profit it can go higher as Disney
always there are lot of potential issue as for example they using only boing 737 so they also depends on all boing issues
Airlines are tough
Plus500, Cal-maine foods, Adecoagro (Brazil again), etc
Thanks for sharing
"A bad situation in Argentina". Hearing that from my birth. Regards from Argentina 🤣
:-))
Haidilao Chinese stock . Wide moat in the hot pot market in China. Should have a look at it Sven
Thanks for sharing
Sven, good company with steady cash flow and solid MOAT is Virgin Galactic, they are printing money. Doing better than FED.
Hahhaaaa
Ottimo lavoro Sven ❤
Grazie
Best Channel On TH-cam
100% agree. Content is top notch!
Thanks!!
Being a subsidiary of a bigger company that is in major debt reminds me of Vandanta
Different owners here
Nope . They dilute shares like crazy
Thanks for sharing
I invested $500 let's see in 1-3 years if it will get 2-3x or get cheaper. Relatively small position in my portfolio. I like to see some drinks in my portfolio after long holding Coca-Cola & Pepsi.
thanks for sharing
Do you know what the foreign tax rate is from dividends received?
Ambev is a classic Graham pick right now
Thanks for sharing
What do u think about swatch group?
Negative free cash flow, stay away...
No idea
I recently bought Pernod Riccard
Same. Seems like a better company.
Thanks for sharing
@@Value-Investing maybe do an analysis of Pernod Ricard?
Yeah. I live next to Brazil and Brazil is full of Ambev trucks delivering drinks absolutely everywhere. They sell like crazy and it is also one of the few businesses that works perfectly in a recession.
I have the stock since 2022 and a little bit down is my second target.
I live in Italy, own a pizzeria, and the top sold "commercial" beers are always Becks and Leffe
Thanks for sharing!
Buy the ADR or the Brazilian stock?
Depends on you
Lol bought Ambev @2.08 on the 3 of july :)
Thanks for sharing
True ..agree
Thanks
Thank you Sven
Thank you
Gross margins have declined from 66% to 50% over the past decade as revenues declined consistently 2014-19 (while acquisitions were being made): very ugly trend.
Dividends represent 60-80% of cashflows over the past 5 years.
Revenue surge in recent years (while volumes dropped) seems purely a result of inflation.
So all you can essentially count on is the (high payout) dividend.
Thanks for sharing
Good day Sven
Good day
Just awful beer but a good company I would say. A p/e of nearly 13 and a 7% dividend - a man could do worse things with his money. But this company has been very good at destroying value since the merger with Bud. Given how cheap the shares are I would like to see the company buying back shares and paying down debt rather than paying out a 7% dividend.
Thanks for sharing
Ironicly AB Inbev has been such a poor investment the past decade.
It is what it is
Pros: Sells a product people want. Company will not go bankrupt. Pays you well to wait. Diversification away from dollar.
Cons. Its been dead money for a decade. Woke disasters of product advertising. Poltics in Brazil.
Dead money with a 7% yield is live money
@@SigFigNewton Only 7% after it dropped by 70%
I think a lot due to IPA trend. I think that’s over now. Every stock has a bottom. This may be it!
@@whiskey_tango_foxtrot__ ah yea, I keep forgetting that past performance is how to determine future performance
@@SigFigNewtonHe is just trying to explain to you that this is NOT a dividend growth play.
Iv dipped my toe in this one y has it gone down tho
Thanks for sharing
Please do a oibr3 video🙏
Book value per share = R$ -400,00. Not great
Thanks for sharing
The issue is, when it cannot really grow, it cannot organically reinvest and therefore not really compound.
Thanks for sharing
IMO investing in companies that are net negatives to society is counter intuitive.
Name any company and I will list a dozen "negatives" to society.
Plus...Beer makes us happy 😊
What a stupid comment 😂
@@SJFyoutube exactly.
@@whiskey_tango_foxtrot__ the keyword is “net”
Thanks for sharing
If you don't find a means of multiplying your income you will wake up one day to realize you didn't plan..
:-)
have you looked as celsius? Reminds me a lot of a Peter Lynch type investment. A good product that is being adopted rapidly, with a great balance sheet and a long runway for growth
Thanks for sharing
Ambev is in downturn since 2013 , stock has already lost 76% of its value last 11 years
Thanks for sharing
Chop 1st Seat 🤣
:-)