$ABEV - Betting Close to Home…

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One of the first principles I learned while investing was to invest in your circle of competence.

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My mentor said, what kind of clothes are you wearing? What is your favorite restaurant? Look at those companies as a starting point. Put your money in a business you understand intimately.

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So $ABEV came to mind, yea, Beer.

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Ambev S.A., through its subsidiaries, engages in the production, distribution, and sale of beer, carbonated soft drinks, other non-alcoholic beverages, malt, and food products. It offers beer primarily under the Skol, Brahma, Antarctica, Brahva, Budweiser, Bud Light, Beck, Leffe and Hoegaarden, Corona, Modelo, Stella Artois, Quilmes Clásica, Paceña, Taquiña, Huari, Becker, Cusqueña, Michelob Ultra, Busch, Pilsen, Labatt Blue, Alexander Keith’s, and Kokanee.

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Any of those ring a bell? You degenerate.

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The company also provides carbonated soft drinks, bottled water, isotonic beverages, energy drinks, coconut water, powdered and natural juices, and ready-to-drink teas under the Guaraná Antarctica, Gatorade, H2OH!, Lipton Iced Tea, Fusion, Do Bem, Pepsi-Cola, Canada Dry, Squirt, Red Rock, Red Bull, Seven Up, Nutrl, Bud Light Seltzer, Palm Bay, and Mike’s brands.
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All the goods. It’s safe to say I am familiar with $ABEV.

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Why I am Bullish on $ABEV

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$ABEV is trading near a 10-year low at $2.41 with a 39b market cap, so it isn’t exactly a small-cap but it still has immense potential to increase in price.

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For starters is trades at 13x PE (near a 10-year low) with the industry average at 28x.

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Debt is in control with a .04% Debt-Equity ratio.

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Flawless books with steady growth in all Key financials.

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6% dividend yield.

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Sounds pretty sweet eh?I look at $ABEV from the same angle I look at beat-down 0.05 penny stocks. What’s the downside risk here compared to the upside? It is sitting strong with no signs of slowing down well boasting a very discounted share price near a 10-year low with a high of $9+.

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Time for the Bear case…

Well $ABEV does a shit ton of business down in South America where the economy is in turmoil.It controls about 80% of the market in Argentina, 70% in Brazil and 60% in Peru.Well we know what’s going on with Hyperinflation down in Argentina (shout out Javier, you got this bro) and the Brazilian Real (yea their currency is called the Real. Hokey shit) is down 7.8% on the year while $ABEV rev growth is up only 8.5%.
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Despite their efforts, the Brazilian Real is cock blocking their share price like the fat chick in the group of hot girls that hasn’t gotten laid in 5 years.However, I see hope with Javier Milei coming into office, he is doing a phenomenal job in Argentina and hopefully, his efforts carry over to the nearby countries.

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Conclusion

I didn’t have it in me to write about some boomer stock, and I have no small caps on my watch list, so I found a good mix in between. The price of this stock strongly relies on South America’s Economy and we are slowly starting to see improvement.With steady financials and a core business we could not live without, this could be a great addition to the watch list for all you Beer lovers (or capitalists).

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That’s All Folks

Thank you for reading. Like usual. Not financial advice.

We don’t own any stock in $ABEV Full disclaimer here

Cheers,

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