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Summary

  • Ambev is leading beverage company in Brazil.
  • Ownership of leading beer brands in Brazil and distribution rights for Pepsi products are competitive advantages.
  • Rising Incomes, the World Cup, and upcoming Olympics are catalysts for stocks.

While the BOVESPA (NYSEARCA:EWZ) has rallied on signs of president Dilma Rouseff re-election odds falling, Ambev (NYSE:ABEV) has sold off. However at current prices Ambev is a buying opportunity. The company produces the two leading brands of local beer: Brahma and Antarctica. They also have the rights of Latin American distribution of Anhauser Busch and Pepsi products. Rising incomes in a celebratory culture such as Brazil should be a long term catalyst for the stock. In addition, purchases from tourists will rise this quarter due to the 2014 World Cup. Also local alcohol consumption should also increase during the local team's soccer games which have been holidays in certain regions of the country. Technical momentum however, is weak which has us waiting for a favorable entry point.

Source: Ambev: Bullish Or Bearish?