Here are some of Itau’s Marcos Severine trading ideas…


What We Like in the Short Term: CPFE3 (ADR: CPL) and CMIG4 (ADR: CIG). These stocks are our current top picks in the Utilities sector; we expect them to perform well in the short term due to the increasing risk aversion in equity markets. Both provide appealing dividends, growth and liquidity.

Not Appealing in the Short Term: LIGT3 and TBLE3. LIGT3 has gained as much as 15% since October 7, basically on the expectation of its inclusion in the MSCI, which was confirmed on November 15. TBLE3 has outperformed the Ibovespa by 8.4% month to date, and we see no short-term triggers for the stock. We therefore believe that both stocks are unappealing in the short term.

Long & Short

Long CPFE3 & Short TBLE3. Both companies have great management, outstanding disclosure and appealing dividends; however, CPFE is likely to provide greater growth (particularly in renewable energy) at higher returns.

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