CBD: Long The Brazilian Consumers And Short The EM Risk

About: Companhia Brasileira de Distribuição (CBD), Includes: EWZ
by: Gunner Laine Hardy
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Gunner Laine Hardy
Deep Value, Research Analyst, Special Situations

Strong deep-value investment found from targeting Brazil's key non-cyclical consumer sector benefiting from rising real wages, projected 2x current GDP growth, increased employment, and a new business-friendly regime under Bolsonaro.

Brazilian retail food play targeted through changing Brazilian consumer preferences and new management brought in from a successful turn-around venture introducing the same cost-cutting and profit enhancing expertise.

Consistent CF, low-risk debt structure, unrivaled sector growth potential, and high CAGR prospects with a margin of safety bring CBD's projected price outlook to a conservative 1-year target of $26.79 (+14% upside).

Source: Grupo Pão de Açúcar | GPA Website


Imagine a situation where the macroeconomic picture presents a clear upside; you've identified the sector that has historically realized the most consistent upside with little downside