# AmBev - ABV



## Argonaut (Dec 7, 2010)

I can't believe I hadn't found this company before. It's a subsidiary of brewing giant Anheuser-Busch InBev, operating in South America and Brazil especially. They sell beer and Pepsi products, plain and simple. It's got almost everything you could look for in a stock. 

- High growth, and sole exposure to the expanding Latin America market.
- Great price action, 50% on a one year basis, 283% on a five year basis, and 854% on a ten year basis.
- Great dividend yield of roughly 4%. Unfortunately it's a bit unpredictable.
- Fairly safe. Nobody is going to stop drinking. P/E is not outrageous at 18.8.

Risks include currency exposure. The Brazilian real is overvalued on a purchasing power basis. Big Macs cost $7, martinis cost $35. However, I expect this to continue with the United States exporting inflation to the rest of the world. The dividend payout ratio is quite high, and growth could potentially slow down. Also, they haven't necessary smashed earnings expectations lately.

Bottom line is that AmBev has probably become my favourite international stock, knocking Coca-Cola off my watchlist in the beverage category. And you can buy it right on the NYSE under ABV. I'm not in a hurry to buy anything but would love to have a position in the long run here.


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## donald (Apr 18, 2011)

Ive been seriously looking @ brown-forman,the maker of jack daniels and other international alcholic beverages,thats another great stock in this sector imo,dont have the yield and div off the top of my head but there is a lot to like of brown-forman,its a attractive long imo


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## Argonaut (Dec 7, 2010)

AmBev up 3.2% today. Another factor I didn't consider is that Brazil is hosting both the World Cup and the Olympics in the near future. There's going to be a lot of drinking.


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## gibor365 (Apr 1, 2011)

Just don't forget that this is ADR, so you will be paying withholding taxes even for RRSP.
"Generally, revenues of foreign investors in Brazil, regulated under Law 4.131, are subject to 15% or 25% withholding tax, except dividends on profits earned as from January 1, 1996 which are not subject to withholding tax."

And dividends they pay whenever they wish: Mar 0.37, Jun 0.01, July 0.09


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## Argonaut (Dec 7, 2010)

Up another 2.1% today. Google's dividend history is wrong. Yahoo's appears to be closer to the mark.


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## Argonaut (Dec 7, 2010)

AmBev up 12.2% since I wrote about it. My own position is only up half of that, but you have to get in sometime, right? Still my favourite international stock.


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## Toronto.gal (Jan 8, 2010)

Don't have to convince me as I already got it some months ago. I'm a Brazilian *bull*, have been from the very beginning; ABV is my 4th fav. stock in the region.

For various reasons, I like the powerful Brazilian economy better than India and China.

Great pick Argo!


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## gibor365 (Apr 1, 2011)

Toronto.gal said:


> ABV is my 4th fav. stock in the region.


just wondering what are the first 3


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## Toronto.gal (Jan 8, 2010)

Do you know what killed the curious cat? 

No brainers: BBD, PBR, VALE [and on the hunt for 1 or 2 more banks].


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## Dmoney (Apr 28, 2011)

Toronto.gal said:


> Do you know what killed the curious cat?
> 
> No brainers: BBD, PBR, VALE [and on the hunt for 1 or 2 more banks].


Was it not curiosity that killed the curious cat?

I like VALE and PBR, don't know BBD but have heard good things about South American banks.


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## Toronto.gal (Jan 8, 2010)

Dmoney said:


> have heard good things about South American banks.


Absolutely! Wish I had invested more in BCH for example [Banco de Chile] than in RY.  Chile's economy is stronger than Brazil, though not as large.


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## ddkay (Nov 20, 2010)

BTG Pactual (largest IB in Brazil) is merging with Celfin Capital (largest IB in Chile), I wish there was a way to play that, they aren't on the Bovespa financials index


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## Argonaut (Dec 7, 2010)

Banco de Chile seems to move lockstep with the more well known Banco Santander-Chile. Reminds me of Canadian banks.

In my opinion, Petrobras is the worst stock in all of Brazil. Constantly making new lows, and diluting the company by issuing shares. Not a Brazilian beach party that I want to be invited to.


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## Toronto.gal (Jan 8, 2010)

For oil, you must think long term.


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## ddkay (Nov 20, 2010)

Brazil's central bank decreased interest rates after market close so it should make Bovespa stocks shoot up tomorrow. 

I'm thinking of buying the EWZ ETF, better dividend than AmBev, top two holdings are PBR and VALE. Still a growth story as long as China doesn't fall down - kind of similar to Canada's economy.

EWZS and BRF look like good domestic small cap plays.


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## ddkay (Nov 20, 2010)

-- Brazil's central bank surprises with 1/2 point rate cut
--Central bank cuts rate to 12% per year, from 12.50%
--Central bank cites substantial deterioration in global economy
--Decision to cut rate follows long tightening cycle
By Jeffrey T. Lewis and Matthew Cowley 
Of DOW JONES NEWSWIRES
BRASILIA (Dow Jones)-- The Brazilian Central Bank on Wednesday reversed course on interest rates, cutting the benchmark Selic rate in a surprise move because of fears about the global economy and knock-on effect locally.
The central bank cut the Selic rate to 12%, from 12.50%, reversing the latest cycle of interest rate hikes which started in April 2010 . The central bank raised rates five times this year as it sought to rein in above-target inflation, most recently lifting the Selic by 0.25 percentage point in July.
While some investors had upped their bets on the possibility of a rate cut in recent days, virtually all economists had expected the central bank to stand pat.
In an unusually long accompanying statement, the central bank sought to explain its change of heart by saying it was taking action to "timely" mitigate the effects of a global economy in crisis. The developed world's problems will last longer than expected, and there's little governments there can do to speed up a recovery, it said.
The "international scenario shows signs of a disinflationary bias," the central bank's monetary policy committee, or Copom, said in the statement.
Brazil's economy is likely to be affected in a number of ways, through lower trade and investments, restrictions on credit or a downturn in consumer or business confidence, the central bank said. Brazil's economy is already slowing and it expects this global effect to accelerate that process. After growing 7.5% in 2010, recent market surveys suggest the economy will grow about half that this year.
"The balance of risks for inflation have become more favorable," the central bank said.
The central bank also nodded to the finance ministry, saying that the " revision to the scenario for fiscal policy" contributed to the better outlook for inflation. With tax revenues running ahead of forecasts, the government on Monday said it would ring-fence an extra 10 billion Brazilian reais ( $6.3 billion ) this year, to prevent it from being spent and to give the central bank space to lower interest rates.
Investors will be bracing for the market reaction to the central bank's decision. High interest rates are one of the factors which have pushed the Brazilian currency to multi-year highs against the dollar, including about a 10% gain over the last 12 months, so the sudden reversal may catch out some in the market. Nonetheless, Brazil's interest rates remain far higher than in countries such as the U.S. or Japan , were rates are near zero.
On Wednesday, the real exited active trading at BRL1.593 to the dollar at 1920 GMT , slightly weaker than its previous close at BRL1.5845 , according to Tullett Prebon via FactSet.
Some, however, may find it hard to adjust their position, given the drop-off in liquidity in the local market over the last month. The government announced in July a new tax on currency derivatives in hopes of deterring some of the speculation and easing pressure on the real, the latest in a long series of such measures.
The rate decision will be welcomed by Brazil's export manufacturing industry, which has suffered the consequences of the strong currency, as well as employers and employees who have been broadly united against high interest rates. On Tuesday, the Forca Sindical umbrella labor group grilled sardines outside the central bankers to remind the directors that Brazil's poor have to eat cheap fish to make ends meet.
"When you can't afford meat or chicken, you buy sardines. It's also what sharks eat, and the sharks are the technocrats who are meeting here today and tomorrow to make a decision about how the Brazilian economy will work," said union president Paulo Pereira da Silva .
President Dilma Rousseff and Finance Minister Guido Mantega have said on repeated occasions that the country is better prepared for an international recession than it was in 2008, with higher foreign reserves, healthier government accounts, and companies and banks in better shape than before.
Growth for Brazil's economy was already slowing before the international situation worsened. Industrial output in July, for example, was down 0.3% from the same month a year earlier. Gross domestic product numbers for the second quarter will be published on Friday, with most economists expecting more evidence of a domestic slowdown.
But inflation is still not fully under control.
Joblessness dropped to a record low of 6% in July, putting upward pressure on prices. A survey of 100 economists and analysts by the central bank Monday showed the average forecast for year-end inflation rising to 6.31% from 6.28% in the previous week's survey, still well above the 4.5% midpoint in the bank's target range.
-By Jeffrey T. Lewis , Dow Jones Newswires; 55-11-3544-7090; [email protected] dowjones.com
- Matthew Cowley in Sao Paulo contributed to this article

(END) Dow Jones Newswires
08-31-11 2104ET 
Copyright (c) 2011 Dow Jones & Company, Inc.


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## Dmoney (Apr 28, 2011)

12% interest rates... Just mind bottling...


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## HaroldCrump (Jun 10, 2009)

Dmoney said:


> 12% interest rates... Just mind bottling...


Why?
In countries where inflation is north of 15%, 12% interest rates are rather low, IMHO.
Not specific to Brazil, but also think of India and China.
US had similar rates, too, back in the late 1970s and 1980s.


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## Toronto.gal (Jan 8, 2010)

ddkay said:


> Brazil's central bank decreased interest rates after market close so it should make Bovespa stocks shoot up tomorrow.


Indeed! Bank stocks like BBD/BSBR/ITUB & others are 5% + today.


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## humble_pie (Jun 7, 2009)

salut t.gal ... can you share your reason for liking vale ??

this co owns the former inco facilities at sudbury plus other canadian emplacements ... voisey bay i believe ... one of the world's biggest miners ... last i heard not doing well ... what am i missing ...


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## Toronto.gal (Jan 8, 2010)

Salut hp:

You're right, it's currently not the best stock as far as price goes & has been suffering lately due to political and other factors, but long term, I like the stock for many reasons, a few would be: 

- I like big diversified mining companies and VALE is the world's 2nd biggest after BHP [which I also own].

- It wants to become the biggest potash/phosphate producer in the region & 2nd in the world *[which is what attracted me to this company in the first place]*.

- Excellent growth prospect [very aggressive expansion plans]
- FCF to do the above
- Tolerable debt
- Acceptable dividend

Latest results:
http://www.dailymarkets.com/stock/2011/07/29/vale-2q-misses-estimate/

*Argo:* you should have named this thread 'Brazil'.


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## Argonaut (Dec 7, 2010)

I didn't know where the thread would go! Anyway, I'll be curious to see when I get my first ABV dividend, how much will be withheld and what it will be. The downside to their dividend seems to be that it is unpredictable. And I don't like those (goodbye WTE.UN).


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