From Cabot Wealth Advisory, 10/22/09 Sign up for free Cabot Wealth Advisory e-newsletter
In hard times, people tighten their belts and curtail their buying. But some product lines resist the urge for tightening, and groceries is one of them.
My idea for today is called Companhia Brasileira de Distribuicao (CBD), which is the second largest retailer in Brazil, a giant chain of nearly 600 stores with about 66,000 employees. The company operates a number of different chains that target different demographics, including Pao de Acucar (high-end supermarkets), CompreBem, Extra Perto and Sendas (value supermarkets), Extra (hypermarkets, which put all classes of merchandise under one roof), Extra-Eletro (electronics and home appliances) and Extra Facil (convenience stores).
The chart for CBD is breathtakingly steady, rising from a late-February low of 22 to a recent high near 65, with only a couple of dips under the 25-day moving average to mar the advance. The company is benefiting from the steady growth of the Brazilian economy, which should only get stronger as preparations for the 2016 Olympics get underway.
CBD is fairly thinly traded (just 226,000 shares a day, on average) and the company will report earnings on November 4, which will determine the stock’s path for the immediate future. But it’s been a genuine tractor, chugging higher for nearly eight months. It’s certainly worth a look.
Editor’s Note: I look at CBD every week—along with every other stock of an emerging market company that trades on a U.S. stock exchange—and I pick the cream of the crop for subscribers to the Cabot China & Emerging Markets Report. We’re currently the #1 rated newsletter for the last five years, beating the market handily! If you’d like to see the results, clicking on the link below will get you started.
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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.