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Savings Experiment: Snow RemovalI've just returned from the World Money Show, where some 10,000+ investors gathered to learn about global investing. I had a chance to meet with many of the advisors who were featured at the show, and will be highlighting some of their favorite investment ideas. To view all of the stocks featured in this special global report, click here.
Petrobras Petroleo-Brasileiro (NYSE:PBR) is among the latest additions to the buy list of Validea, a newsletter that selects its stocks by following the investment guidelines of time-tested strategies employed by investment "legends". In this case, the stock pick is based on the ideas of David Dreman, James P. O'Shaughnessy, and Peter Lynch.
Editor John Reese explains, "Petrobras is an integrated energy company controlled by Brazil's government. It is dominant in a number of markets. For example, it controls 98% of the country's refining capacity. Three guru strategies favor Petroleo Brasileiro.
"One of these is the strategy we base on the writings of David Dreman. The Dreman strategy views the company as a contrarian investment because both its P/E and price-to-cash flow ratios are in the bottom 20% of the market.
"However, the company is doing reasonably well financially, notes the strategy. Earnings are increasing, the company's current ratio of 1.51 exceeds its industry's average, return on equity is a very strong 35.05 percent and pretax profit margins are also very strong, at 32.59%. In addition, the stock's yield is 3.35%.
"The James P. O'Shaughnessy strategy also likes Petroleo Brasileiro a lot. In the company's favor is: a large market cap ($1.05.5 billion), strong cash flow per share ($15.49), plenty of shares outstanding (1.1 billion), lots of sales ($69.6 billion), and its good yield.
"The final strategy that gives Petroleo Brasileiro a 'strong interest' rating is that based on the writings of Peter Lynch. The company's P/E is low (7.87), its growth is high (35.6 percent, based on the average of the three, four, and five year historical EPS growth rates) and its P/E/G ratio, which looks at the P/E relative to growth, is a very strong 0.22 (less than 1.0 is acceptable and less than 0.5 is great)."
Steven Halpern's TheStockAdvisors.com provides a free, daily overview of the latest stock ideas from the nation's leading financial newsletters.
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