Patricia Perez-Coutts Petroleo Bras Sa Petro PBR-N Unspecified Sep 19, 2022

Petrobras (PBR) is the national energy company of Brazil.  The company released its strategic plan to 2050 and it emphasizes a renewed growth in capital projects along with a large distribution to share holders ($55 bn by 2029).  It trades at 6x earnings, 1.2x book and supports a 29% ROE.  We like that cash reserves are growing.  The healthy dividend is backed by a payout ratio under 60% of cash flow.  We recommend setting a stop-loss at $12, looking to achieve $18 -- upside potential over 25%.  Yield 6.5%  

We reiterate PBR, Brazil's national energy producer as a TOP PICK.  Quarterly cash flows reveal that the company is once again building reserves, while continuing to pay down debt.  It trades at 5x earnings, 1.2x book and supports a 22% ROE.  The dividend yield is supported by a payout ratio of 55% of cash flows.  We continue to recommend a stop at $12, looking to achieve $17 -- upside potential of 23%.  Yield 7.4%

Our PAST TOP PICK with PBR is progressing well.  To remain disciplined, we recommend trailing up the stop (from $12.00) to $13.50 at this time.  

Our PAST TOP PICK with PBR has triggered its stop at $13.50.  To remain disciplined, we recommend covering the position at this time.  This will result in a net investment loss of 3%, when combined with our previous guidance.