Latin American stocks managed to avoid the shock suffered by their North American peers in 2022. And investment bank UBS thinks the rally will continue this year. This sentiment is also reflected in the iShares Latin America 40 ETF, which is up nearly 4% this year after delivering a 10% gain last year. The US benchmark S&P 500 index is up by a similar rate this year — but down more than 19% in 2022. UBS shared with clients its top stocks listed in Latin America, where they expect the “short-term catalyst” to move the stock price. “We focus on stocks where we believe our analysts have a truly divergent view from the consensus and where we see short-term catalysts playing a key role.” Analysts write for clients. Here are three buy-rated stocks with over 50% gains from UBS’s “highly persuasive idea with catalysts” report, Feb. 8. Cielo UBS analyst Kaio Prato expects it. Cielo shares will rise 88% to 4.79 Brazilian Reals ($0.9) a share over the next 12 months, significantly more than the 6.3% consensus average price target compiled by FactSet. Cielo, Brazil’s largest credit and debit card operator, is expected to benefit from the Central Bank of Brazil’s decision to limit exchange fees from April 1. These fees are normally charged. paid by payment processors, such as Cielo, to banks that issue cards to customers. Sabesp Investment Bank expects shares of Sao Paulo-based water treatment and supply company Sabesp to rise 59% over the next 12 months, in line with consensus estimates. UBS says the company, one of the world’s largest sanitation companies serving 28 million people in Brazil, will benefit from the efficiency and expected privatization momentum from the newly elected state chamber of São Paulo. . According to UBS, the majority of elected members of the state legislature are from right-wing parties that have historically been more pro-privatization. Vibra Shares of Vibra Energia, the largest gas station operator in Brazil, are expected to rise 50%, according to UBS. Their price target is twice as high as the average price target of analysts polled by FactSet. The company splits from oil major Petrobras in 2021 and will benefit from a $590 million acquisition of energy trading company Comerc. Although that deal is set to begin in 2021, UBS believes “the market is not pricing in” increased earnings from Comerc. “We expect earnings through 2023 to be a positive catalyst as Comerc increases its market share in Vibra consolidation [earnings]”, said analyst Luiz Carvalho. “Especially [second half this year] could prove to be an important signal about potential dividends to come as leverage declines further.”
