< The 2015 Latin America Research Team
Fernando Ferreira, Isabella Simonato & teamBank of America Merrill LynchFirst-place appearances: 1
Total appearances: 7
Team debut: 2009Down one position to No. 3 on this lineup is Bank of America Merrill Lynch, whose group co-headed by Fernando Ferreira, 31, and Isabella Simonato, 28, also captures third place on the Food & Beverages list. The researchers’ “periodic review of agricultural performance in Brazil” is particularly impressive, one investor remarks, “showing even exports prices, which are useful in fine-tuning our portfolio.” The trio hails from São Paulo and covers 21 companies in total, six of which are Latin American agribusiness names. Maintaining a generally positive outlook on ethanol and sugar names and a more cautious stance on farming and fertilizer concerns, the team warns of possible emerging risks. “If the El Niño [weather event] is confirmed for this season, it could mean above average rainfall during the [sugarcane] crushing season, which could then lead to lower sugar content in the plants, lower yields and fewer days of crushing,” says Ferreira. “This would affect the productivity of the sector. In addition, most of the agriculture companies are focusing on improving cash flow generation and deleveraging, which might be challenging if commodities prices — like [those of] sugar, soybean and corn — do not recover.” One of the group’s favorite names is Brazilian ethanol and sugar supplier São Martinho, which the analysts expect to continue to generate solid free cash flows amid lower capital expenditures. São Martinho boasts solid operating margins as well, and they believe that fundamentals justify a price of 45 reais. The stock closed at 36.62 reais in mid-July. Brazil’s SLC Agrícola — whose farms primarily produce coffee, corn, cotton, soybeans and wheat — is also preferred, primarily on its inexpensive valuation. They peg the shares at 23 reais, implying a 27.5 percent upside to their value in mid-July.