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($$$MR. MARKET$$$ is a proprietary investor and does not provide individual financial advice. The stocks mentioned on this forum do not represent individual buy or sell recommendations and should not be viewed as such. Individual investors should consider speaking with a professional investment adviser before making any investment decisions.)
I know when you think about Brazil, you probably think about Pele making a bicycle kick:
But I am looking for a safe haven to invest in…and one place I don’t mind looking is just south of us. Brazilian business circles are whooping it up since the election of President Bolsonaro in October and the appointment of Paulo Guedes, a free-market evangelist, as economics minister. Many businesses are y confident that Brazil is poised for an upswing after years of sluggish growth following the worst recession in the nation’s history. Think about the United States in 2009…that’s where Brazil is right now! Brazil has a very stable environment right now. Brazil is going to grow independent of what happens in politics at least over the next couple of years. If you like what you hear, why not grab a piece of Brazil. Cosan Limited (CZZ), listed on the New York Stock Exchange (NYSE) since 2007, is the holding company responsible for capital allocation and asset portfolio management.
Today I bought CZZ at 13.12. I will sell it in 4 to 6 weeks at 15.13. Here’s why I like CZZ:
First of all, check out the chart:
This stock is up about 100% in the last nine months, yet it has a very modest PE of only 24. It’s growth at a very reasonable price. What’s more, the diversity within this company makes it a very safe investment.
With a unique portfolio of assets and management committed to operational excellence and sustainability across all our segments, Cosan became one of Brazil’s largest economic groups, investing in strategic sectors such as agribusiness, fuel and natural gas distribution, lubricants, and logistics. Over the course of our 80+ years of history, Cosan has succeeded in diversifying its portfolio, combining complementary companies such as Raízen (Fuel and Energy), Comgás, Moove, and Rumo, leaders in their sectors. This is a good sized 4 billion dollar USD company.
A joint venture between Cosan and Shell, Raízen (a subsidiary of Cosan) is Brazil’s fourth-largest company by revenue, Brazil’s second-largest fuel distribution company, a leading manufacturer of sugarcane ethanol in Brazil and the largest individual sugar exporter in the global market. They market franchised gasoline stations under brand names Shell and Esso. These are great brands. There is talk in the US of increasing the ethanol requirement in gasoline from 10% to 15%. That means 50% more ethanol consumption. That means that the demand for sugarcane ethanol is going to increase considerably. That will be great for Raizen, and very good for CZZ. Brazil production costs are well below that of any of its international rivals. Cosan is the third-largest standalone sugar producer in the world…BOOM! Lutz, the CEO of Cosan, was just named to the board of Corteva – one of the biggest ag producers in Brazil…pretty good relationship.
Comgás, another CZZ subsidiary, with its natural gas distribution company is a complete provider of energy solutions and services in Brazil. Moove is a global producer and distributor of Mobil-brand lubricant production and distribution. As Brazil grows, there will be more drivers, more cars and more lube oils consumed. This of course also helps Raizen’s retail business. Yes, they buy cigarettes, coffee and Twinkies at Brazilian gas stations also. Retail valuations for gas stations are going off the charts in the US. These are darn good businesses.
Rumo is Latin America’s largest logistics operator, with an independent railway base, and offering a broad range of rail transportation logistics services, port loading, and storage. As Brazil’s economy grows, railroads always benefit with economic growth. There is still a great deal of trucking which can shift to rail for more economic transportation and Rumo benefits from all of this. In order for Brazil to grow its export businesses, the country needs to expand capacity in rail and storage. President Jair Bolsonaro’s government is seeking to double the country’s railway capacity through concessions that will demand about 25 billion reais ($6.3 billion) in capital expenditures over the next few years. Brazil is already the world’s biggest exporter of agricultural goods from beef to soybeans. CZZ would directly benefit from this. “Brazil infrastructure is now the hot story in commodities,” the 49-year-old executive said in an interview at Cosan’s headquarters in Sao Paulo. “We see a clear opportunity that derives from a long winter of under-investment,” he said. Rumo will spend as much as 15 billion reais in capex through 2023, while “several” other investment opportunities are being considered. “We’re talking about investments of a magnitude that have never been seen in Brazil’s railway sector,” he said.
CZZ delivered a bottom-line expansion of 67% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did CZZ outperform its past performance, its growth also surpassed the Oil and Gas industry expansion, which generated a 30% earnings growth. Cosan’s adjusted net income totaled R$195.5 million ($51.9 million) in first-quarter 2019, up 61.3% from the year-ago tally of R$121.2 million ($37.3 million). Net income surged 79% from R$106.3 million ($32.7 million) recorded in first-quarter 2018.
Obviously these robust earnings are driving the momentum in this stock’s price. Go Go Go Go Go. Over the past quarter, shares of Cosan have risen 12.75%, and are up 55.77% in the last year. In comparison, the S&P 500 has only moved 3.18% and 4.69%, respectively. Over the past two months, 1 earnings estimate moved higher compared to none lower for the full year. These revisions helped boost CZZ's consensus estimate, increasing from $0.75 to $0.87 in the past 60 days. Looking at the next fiscal year, 1 estimate has moved upwards while there have been no downward revisions in the same time period.
Def Leppard said “Pour some sugar on me”. I think Cosan is going to pour some sugar all over Brazil while the railroad expansion says choo choo choo with all of the quatloops that I will be taking to the bank on this stock pick. I am HUGE!
$$$MR. MARKET$$$
I know when you think about Brazil, you probably think about Pele making a bicycle kick:
But I am looking for a safe haven to invest in…and one place I don’t mind looking is just south of us. Brazilian business circles are whooping it up since the election of President Bolsonaro in October and the appointment of Paulo Guedes, a free-market evangelist, as economics minister. Many businesses are y confident that Brazil is poised for an upswing after years of sluggish growth following the worst recession in the nation’s history. Think about the United States in 2009…that’s where Brazil is right now! Brazil has a very stable environment right now. Brazil is going to grow independent of what happens in politics at least over the next couple of years. If you like what you hear, why not grab a piece of Brazil. Cosan Limited (CZZ), listed on the New York Stock Exchange (NYSE) since 2007, is the holding company responsible for capital allocation and asset portfolio management.
Today I bought CZZ at 13.12. I will sell it in 4 to 6 weeks at 15.13. Here’s why I like CZZ:
First of all, check out the chart:
This stock is up about 100% in the last nine months, yet it has a very modest PE of only 24. It’s growth at a very reasonable price. What’s more, the diversity within this company makes it a very safe investment.
With a unique portfolio of assets and management committed to operational excellence and sustainability across all our segments, Cosan became one of Brazil’s largest economic groups, investing in strategic sectors such as agribusiness, fuel and natural gas distribution, lubricants, and logistics. Over the course of our 80+ years of history, Cosan has succeeded in diversifying its portfolio, combining complementary companies such as Raízen (Fuel and Energy), Comgás, Moove, and Rumo, leaders in their sectors. This is a good sized 4 billion dollar USD company.
A joint venture between Cosan and Shell, Raízen (a subsidiary of Cosan) is Brazil’s fourth-largest company by revenue, Brazil’s second-largest fuel distribution company, a leading manufacturer of sugarcane ethanol in Brazil and the largest individual sugar exporter in the global market. They market franchised gasoline stations under brand names Shell and Esso. These are great brands. There is talk in the US of increasing the ethanol requirement in gasoline from 10% to 15%. That means 50% more ethanol consumption. That means that the demand for sugarcane ethanol is going to increase considerably. That will be great for Raizen, and very good for CZZ. Brazil production costs are well below that of any of its international rivals. Cosan is the third-largest standalone sugar producer in the world…BOOM! Lutz, the CEO of Cosan, was just named to the board of Corteva – one of the biggest ag producers in Brazil…pretty good relationship.
Comgás, another CZZ subsidiary, with its natural gas distribution company is a complete provider of energy solutions and services in Brazil. Moove is a global producer and distributor of Mobil-brand lubricant production and distribution. As Brazil grows, there will be more drivers, more cars and more lube oils consumed. This of course also helps Raizen’s retail business. Yes, they buy cigarettes, coffee and Twinkies at Brazilian gas stations also. Retail valuations for gas stations are going off the charts in the US. These are darn good businesses.
Rumo is Latin America’s largest logistics operator, with an independent railway base, and offering a broad range of rail transportation logistics services, port loading, and storage. As Brazil’s economy grows, railroads always benefit with economic growth. There is still a great deal of trucking which can shift to rail for more economic transportation and Rumo benefits from all of this. In order for Brazil to grow its export businesses, the country needs to expand capacity in rail and storage. President Jair Bolsonaro’s government is seeking to double the country’s railway capacity through concessions that will demand about 25 billion reais ($6.3 billion) in capital expenditures over the next few years. Brazil is already the world’s biggest exporter of agricultural goods from beef to soybeans. CZZ would directly benefit from this. “Brazil infrastructure is now the hot story in commodities,” the 49-year-old executive said in an interview at Cosan’s headquarters in Sao Paulo. “We see a clear opportunity that derives from a long winter of under-investment,” he said. Rumo will spend as much as 15 billion reais in capex through 2023, while “several” other investment opportunities are being considered. “We’re talking about investments of a magnitude that have never been seen in Brazil’s railway sector,” he said.
CZZ delivered a bottom-line expansion of 67% in the prior year, with its most recent earnings level surpassing its average level over the last five years. Not only did CZZ outperform its past performance, its growth also surpassed the Oil and Gas industry expansion, which generated a 30% earnings growth. Cosan’s adjusted net income totaled R$195.5 million ($51.9 million) in first-quarter 2019, up 61.3% from the year-ago tally of R$121.2 million ($37.3 million). Net income surged 79% from R$106.3 million ($32.7 million) recorded in first-quarter 2018.
Obviously these robust earnings are driving the momentum in this stock’s price. Go Go Go Go Go. Over the past quarter, shares of Cosan have risen 12.75%, and are up 55.77% in the last year. In comparison, the S&P 500 has only moved 3.18% and 4.69%, respectively. Over the past two months, 1 earnings estimate moved higher compared to none lower for the full year. These revisions helped boost CZZ's consensus estimate, increasing from $0.75 to $0.87 in the past 60 days. Looking at the next fiscal year, 1 estimate has moved upwards while there have been no downward revisions in the same time period.
Def Leppard said “Pour some sugar on me”. I think Cosan is going to pour some sugar all over Brazil while the railroad expansion says choo choo choo with all of the quatloops that I will be taking to the bank on this stock pick. I am HUGE!
$$$MR. MARKET$$$
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