By Paul Goodwin, Editor of Cabot China & Emerging Markets Report
From Cabot Wealth Advisory 1/13/11 Sign up for free Cabot Wealth Advisory e-newsletter
For my stock pick this week, I’m going to discuss AmBev (ABV), which I recommended in my Cabot China & Emerging Markets Report a month ago.
AmBev, also known as the Companhia de Bebidas das Americas, is a Brazilian beverage company with a lineup that includes beers like Brahma, Skol and Antarctica as well as drinks like Gatorade, Lipton and Pepsi-Cola.
While Brazilian beer sales contribute more than half of the company’s revenues (52% in 2009), AmBev has operations in 14 countries, and gets a sizable chunk of sales in Canada (17% in 2009) from its ownership of Labatt Brewing, which it bought in 2004. Beer sales in the rest of Latin America amounted to about 20% of 2009 sales, while non-alcoholic beverages kicked in about 11%.
While the Great Recession in 2008 took a toll on AmBev’s earnings and revenue growth, the company was always solidly profitable. The last four quarters of earnings growth have included gains of 36% (in Q4 2009), 61%, 19% and 53%. Revenue growth for the period has come in at 41%, 40%, 16% and 15%. And the company’s Q3 report showed a record after-tax profit margin of 30.4%.
ABV, which recently split 5-for-1, has good support in the 28 area. And a dividend (annual dividend yield of 2.0%), ties up the package nicely.
Editor's Note: You could buy ABV here and hope for the best, or you could read Paul’s latest thinking on the stock and others in Cabot China & Emerging Markets Report. Click here to learn more.
Emerging Markets Specialist, Analyst and Editor of Cabot China & Emerging Markets Report
A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and editor of Cabot China & Emerging Markets Report since 2005. Under Paul’s stewardship, Hulbert Financial Digest rated Cabot China & Emerging Markets Report the number-one-rated newsletter of 2006 with a 78.6% gain for the year, the number-one-rated newsletter of 2007 with a 74.1% return, and the top-performing investment adivsory for five years with a 17.9% annual return.
|Companhia de Bebidas Das Americas--AmBev (ABV)
Rua Dr Renato Paes De Barros 1017
4 Sao Paulo, SP 04530-001 Brazil
55 11 2122 1415
|Index Membership: N/A |
Full Time Employees: 42,635