Vale and Itaú are the stocks most recommended by analysts to start the year

Driven by the process of reopening the Chinese economy and less susceptible to the uncertain domestic scenario, the shares of the mining company Vale were the most recommended by banks and brokerages for investors to start the year 2023.

Out of 10 recommended stock portfolios, the mining company’s shares were practically unanimous, with 9 nominations for the month of January. In 2022, Vale’s shares have already performed well above the market average, with an appreciation of 25%, while the Ibovespa index rose 4.7%.

Also among the favorites of market specialists, the shares of Itaú Unibanco received seven nominations, benefiting from a scenario of high interest rates in the country.

The manufacturer of electronic equipment for the energy and industrial consumption sectors Weg, with five recommendations, and Eletrobras and PetroRio, with four each, also appear among the stocks on the Stock Exchange most remembered by analysts for those investors looking for options to keep some exposure in the variable income segment this year.

Vale takes advantage of China’s reopening, analysts say

Among the houses that recommended Vale’s shares, analysts at BTG Pactual say that the mining company is the best alternative for investors to take advantage of the likely reopening of the Chinese economy, after a long period of restriction measures to prevent the spread of Covid-19 .

“The company remains one of our preferred names for exposure to the reopening of the Chinese economy. As we move into 2023, we expect economic activity to [da China] gradually recover, as the government eases restrictions and helps to moderate the real estate market correction”, say the bank’s analysts, who project GDP growth (Gross Domestic Product) of the Asian giant between 4.5% and 5% in 2023, after an expected expansion of 3.3% in 2022.

They also point out that they welcome Cosan’s entry as a relevant shareholder on Vale’s board, and that the mining company’s search for partnerships for the base metals division has the potential to generate value for investors in the long term.

“Its hefty payment of half-yearly dividends is a great attraction and a way of balancing our investment portfolio with a very solid company”, say analysts at Órama Investimentos, adding that the high quality of the ore, combined with the economy of scale due to the large volume produced, make Vale’s operation internationally competitive.

Analysts at Guide Investimentos also say that, although the mining company’s results were not as encouraging in the third quarter of 2022, the shares continue to be traded at discounted levels compared to the expected performance ahead.

“We maintain a conservative posture in our portfolios, avoiding indebted companies and companies with low margins [nível de rentabilidade da operação]two groups that have been more penalized by investors since interest rates started to rise”, point out the brokerage analysts.

Itaú benefits from high interest rates and efficient operations, assesses BTG

Regarding Itaú shares, which advanced 22% last year, BTG Pactual analysts point out that only a few sectors benefit from high interest rates, with financial services companies, such as banks and insurance companies, being among the few that do relatively well in a scenario of high rates, at least in the short term.

Analysts at XP Investimentos say that Itaú has the most efficient operation among the large Brazilian banks, which puts it in a good position to overcome the challenging macroeconomic scenario that is emerging in the coming months, with high interest rates and low GDP growth ( Gross Domestic Product).

“The combination of its industry-leading profitability history (due to its operational efficiency and long lending history) and strong exposure to consumer credit lines for individuals should pave the way for Itaú to lead the industry ahead of credit in the coming years”, say XP analysts, adding that the bank will be able to continue growing its credit portfolio in the short term, keeping defaults at healthy levels.

Analysts at Ágora Investimentos point out that the bank saw profit jump by almost 20% in the third quarter, reaching R$ 8.1 billion, benefiting from a riskier credit portfolio mix and higher interest rates.

“The main question for Itaú’s management team going forward is how sustainable this growth in lending in risk lines (i.e. credit cards and personal loans) will be in the coming quarters, but for the moment we believe that it still makes sense for the shares to remain in our portfolio”, point out the Ágora analysts.

For analysts, Weg should maintain a strong growth pace

In the case of Weg, whose shares appreciated by 18% last year, analysts at Terra Investimentos claim that the manufacturer of electrical machinery and equipment has a strong presence in the foreign market and should maintain a strong growth pace, sustained mainly by the division electric mobility and renewable energies.

“The company is already the 2nd in the world ranking of low voltage electric motors, surpassing Siemens and second only to ABB.”

Analysts at Ágora Investimentos also claim that, despite the risks of an abrupt slowdown in the global economy, Weg has been leading technological issues in renewable energy and in the process of electrifying vehicles, “factors that seem to be neglected in market projections.”

“The company has shown consistent performance in recent years, with interesting revenue growth combined with the evolution of the return on invested capital, having proved to be resilient to the effects of the pandemic due to the geographic diversification of its operations and its product portfolio”, they say. analysts from Guide Investimentos, adding that Weg’s results in the third quarter were very solid, with profit growth of around 40% on an annual basis, to R$ 1.2 billion, reinforcing the positive perception about the business.

Eletrobras has room for appreciation, says XP; PetroRio is an alternative to Petrobras in the sector

Regarding Eletrobras shares, which in 2022 rose 28.4%, analysts at XP Investimentos state that a possible reversal of privatization by the Lula government is unlikely, given the costs that the initiative would entail, and that they remain optimistic about the prospects for the evolution of the company.

“Eletrobras is huge and has just ceased to be a state-owned company. All measures to increase its efficiency are currently the subject of debate by investors and a priority within the company”, say analysts at XP, who also praise the return of Wilson Ferreira to the position of President of Eletrobras, which, according to them, is an indication that the necessary adjustments to improve the company’s operational management will occur quickly.

BTG Pactual analysts add that, after Wilson Ferreira took office at the end of September, already in October, Eletrobras announced a voluntary resignation program involving 2,300 eligible employees, “representing the beginning of the restructuring agenda defined by management and eagerly awaited by the market.”

Regarding the shares of the oil company PetroRio, which jumped 80% last year, analysts at BTG Pactual say that the reopening of China should also contribute to sustaining oil prices in the international market.

“The natural option to gain exposure in oil and gas in Brazil is the state-owned Petrobras, but the uncertainty about how it will be managed by the new government leads us to avoid the name”, point out the bank’s analysts. They further say that even after a strong performance throughout 2022, “we believe there is room for more.”