100% total return on $VALE since this post.
Fun fact: Brazilian stocks are the cheapest equity market in the world when you look at earnings, dividends, cash flow and book value. I can already tell you this: if the commodity bull market runs for a few more quarters,
Brazilian stocks will no longer be the cheapest market in the world. And in investing, the biggest gains don’t come from earnings growth, but from multiple expansion. My favorite in Brazil has been Vale for quite some time.
And I don’t think the CEO of Vale could have explained it better: “Vale has to be the biggest mining company in the world because we are sitting on the biggest mining endowment in the world.” Vale’s market cap is $73bn versus $BHP at $171bn.
So there is still a lot of upside left. Last week, Brazil was the best performing equity market in the world, up more than 10% in USD. Note that the Nasdaq is still below its October all-time high.
The longer the Nasdaq fails to perform, the higher the chance investors will start reallocating capital to where it actually works.
And here is the irony: among the 20 largest countries in the world, 19 are running stimulus policies. The only one that isn’t? Brazil.
That should be a headwind, and yet Brazilian stocks are still performing extremely well. Cheap valuations, improving fundamentals, and capital starting to move. That’s how multi-year winners are born.
https://x.com/KarelMercx/status/2015507922290200987?s=20 |
