Itau Unibanco (ITUB): A strong stock with good defensive characteristics

By Paul Goodwin, Analyst and Editor of Cabot China & Emerging Markets Report

From Cabot Wealth Advisory, 12/3/09. Sign up for free Cabot Wealth Advisory e-newsletter

Emerging markets are hot, but volatile, as the end of the year approaches, and most of us have better things to do than ride herd on a flock of growth stocks that are acting like a box of puppies.

It’s a good time to look for a strong stock with some good defensive characteristics that won’t spring an unpleasant surprise on you while you’re shopping for a Christmas tree.



And Itaú Unibanco (ITUB) definitely qualifies. This Brazilian banking giant is hugely liquid (trades over 12 million shares a day on average), pays a dividend (forward annual dividend yield of 0.30%) and has an estimated forward P/E ratio of just 15.

The bank has a number of breezes at its back, including Brazil’s scheduled hosting of both the Olympics in 2016 and (perhaps even a bigger deal for futbol-mad Brazilians) the World Cup in 2012. The anticipated influx of global capital is expected to keep Brazil’s economy ticking over nicely, and Itaú Unibanco’s size (market cap of $108 billion) and the strength of the Brazilian real make the bank a great partner for international developers.

ITUB has come a long way since it bottomed at 8 in March and it has just cleared its all-time highs. All in all, it’s an attractive package.

Editor’s Note: Cabot China & Emerging Markets Report had Itaú Unibanco’s competitor Banco Bradesco in its portfolio back in March 2008, just in time to get caught by the Big Bear of 2008.  But subscribers had the benefit of the Report’s market timing indicator, the Cabot China-Timer that got the portfolio out of the market and into 100% cash for much of the market’s collapse. If you’d like the benefit of the Report’s expert stock picking and market timing, try a trial subscription today. This link will get new subscribers started on a no-risk basis: Cabot China & Emerging Market Report 




Paul GoodwinPaul Goodwin


Emerging Markets Specialist, Analyst and Editor of Cabot China & Emerging Markets Report

A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and editor of Cabot China & Emerging Markets Report since 2005. Under Paul’s stewardship, Hulbert Financial Digest rated Cabot China & Emerging Markets Report the number-one-rated newsletter of 2006 with a 78.6% gain for the year, the number-one-rated newsletter of 2007 with a 74.1% return, and the top-performing investment adivsory for five years with a 17.9% annual return.