PBR is extremely undervalued. Revenues and FCF have grown significantly since the beginning of operations for the company, yet it is trading as if it's moving into bankruptcy. If they begin to pay down corporate debt, shareholder value will be unlocked.
Market concerns: Brazil has 5-6% and gov't seems to weigh down PBR's potential.
Technicals: suggests that PBR is likely nearing a long term bottom. The largest spikes in were in 2003 , 2009 , and now in 2014. Also, the ( formation) may suggest a break-out to the upside.
Each RELATIVE entry point ended up delivering massive returns. With that said, there will be continued , however $10.27 is a VERY good price in my opinion. I will most likely open a (100k) position in PBR tomorrow.
LT PT: $20-$30. Questions? Comment below. Thanks.
PBR might be at $5 next year, or it could be at $20. But provided they are a multi-billion dollar company with a very strong financial position. It is unlikely they will stay around $10 for an extended period of time. EPS continues to grow, don't let the market fool you (Buffett rarely is).
I'm initiating a position here (3% of my portfolio). I have alot more capital to work with in order to average down. For instance, if the price goes to $9 I can double my position.
Conversely, I wouldn't be surprised if VALE and PBR started moving higher from here. I'm growing my positions, but staying conservative for the sake of volatility (we might see cheaper price levels). And while sentiment is in the dumpster...the market can ignore fundamentals for only so long. Asset allocation is a tricky ordeal because you don't know when the institutional money will move back in.