Group 1 - Philip MacKellar is an analyst, portfolio manager, and investor at Contra the Heard Investment Newsletter, focusing on contrarian and value-oriented investment opportunities in the US and Canada [1] - Contra the Heard was founded in 1995 and is based in Toronto, with Philip being part of the company since 2011 and investing since 2004 [1] - The newsletter also covers M&A, special situations, and includes investments in bonds, preferred shares, and convertible securities [1] Group 2 - Philip maintains a personal finance blog at mymoneymoves.ca and is active on social media platforms like Twitter and YouTube [1]

Core Insights - Investors in Ambev S.A. (ABEV) should monitor stock movements due to significant activity in the options market, particularly the Jan 17, 2025 $5.50 Call which has high implied volatility [1] Company Analysis - Ambev currently holds a Zacks Rank of 4 (Sell) within the Beverages - Alcohol industry, which is in the bottom 14% of the Zacks Industry Rank [3] - Over the past 60 days, no analysts have increased earnings estimates for the current quarter, while one analyst has lowered the estimates, resulting in a decrease of the Zacks Consensus Estimate from 5 cents per share to 4 cents [3] Options Market Insights - The high implied volatility in Ambev's options suggests that traders are anticipating a significant price movement, potentially due to an upcoming event that could lead to a rally or sell-off [2][3] - Options traders often seek high implied volatility options to sell premium, aiming to benefit from the decay of options value if the underlying stock does not move as much as expected [3]

Financial Data and Key Metrics Changes - EBITDA grew nearly 16%, with an 18% increase excluding Argentina [13] - Gross margins expanded by 200 basis points organically, and EBITDA margin expanded by 300 basis points organically [13] - Normalized profit declined around 8%, while cash flow from operating activities decreased by nearly 2%, totaling about BRL 3.4 billion [13][15] Business Line Data and Key Metrics Changes - In Brazil, volumes grew almost 8%, with the non-sugar portfolio growing 15% [7] - In CAC, volumes increased by 3.4% and EBITDA by 18%, with a margin expansion of 330 basis points [6] - In Canada, EBITDA declined by 2% due to a tough industry environment, but cash flow increased [6] - In Argentina, volumes declined by over 21% due to a challenging consumption environment [7] Market Data and Key Metrics Changes - Net revenue per hectoliter in Brazil grew 6.8% driven by revenue management initiatives [7] - Fresh retailers grew nearly 6%, ahead of general consumer inflation [8] - The marketplace grew GMV sequentially by 32% compared to last year, contributing close to 10% of net revenue growth year-to-date [8] Company Strategy and Development Direction - The company is focusing on four "focus brands" for additional investments, which include Corona, Spaten, Budweiser, and Brahma [9][10] - The strategy aims to balance volume growth with net revenue per hectoliter growth, prioritizing price increases in line with inflation [22] - The company is committed to maintaining operational performance and cash flow generation despite tax headwinds in Brazil [12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in volume growth, particularly in Brazil, despite challenges in Argentina and Canada [12][66] - The company anticipates continued tax impacts on net income but aims to deliver consistent and sustainable results [66] - Management noted that April and May were the toughest months in Argentina, but there are signs of a reverting trend [57] Other Important Information - The company donated over BRL 16 million to support local communities affected by heavy rains in Rio Grande do Sul [5] - The company has identified over 75% of its main suppliers in Brazil operating with renewable energy sources [19] Q&A Session Summary Question: Pricing strategy in Brazil beer - Management confirmed that pricing adjustments for ICMS in beer were implemented, and future pricing will focus on sustainable balance between volume and revenue growth [22][23] Question: Dynamics of mainstream brands - Management highlighted that Brahma and Antarctica are performing well, with Brahma prioritized as a focus brand [28] Question: Capital allocation and CapEx - Management indicated a trend of lower CapEx in 2024, focusing on capacity investments and maintaining a strong free cash flow [29][32] Question: Competitive dynamics and market share - Management noted that the beer industry in Brazil remains competitive, with the company gaining ground against competitors [40] Question: Core portfolio and premiumization - Management emphasized the importance of maintaining core brand relevance while also focusing on premium and innovative products [43][46] Question: Performance by channel - Management reported strong performance in third-party distribution channels, with off-trade performing slightly better than on-trade [63]

Financial Performance Highlights - Overall volume increased by 0.4%[6] - EBITDA increased by 15.9%[6] leading to a 300 bps increase in EBITDA margin[6] - Free Cash Flow increased by 9.0%[6] - Normalized Profit decreased by 8.3%[6] - Organic volume grew by 3.4%[9], with organic NR/hl (Net Revenue per Hectoliter) increasing by 4.8%[9], resulting in a 17.9% increase in organic EBITDA and a 330 bps increase in EBITDA margin[9] Business Unit Performance - BU Canada experienced a volume decrease of 6.9%[10], NR/hl increased by 1.3%[10], EBITDA decreased by 2.2%[10], and EBITDA margin increased by 110 bps[10] - BU LAS (Latin America South) saw a volume decrease of 13.7%[11], but NR/hl increased significantly by 16.4%[11], leading to a 7.6% increase in EBITDA and a 180 bps increase in EBITDA margin[11] - BU Brazil NAB (Non-Alcoholic Beverages) experienced strong growth, with volume up by 7.7%[12], NR/hl up by 6.8%[12], EBITDA up by 40.1%[12], and EBITDA margin up by 500 bps[12] - BU Brazil Beer saw volume increase by 2.9%[13, 17], NR/hl increased by 3.9%[17], EBITDA increased by 20.8%[17], and EBITDA margin increased by 350 bps[17] Brand and Innovation - Brand health reached an all-time high[21, 23] - Innovation in BEES (products assortment) is reaching over 65% of the Brazilian population, covering over 700 cities[21] - First half of 2024 volumes are over 10% compared to last year[23], contributing to 120% of Brazil Beer growth[23] Financial Priorities - Normalized EBITDA increased by 15.9%[25] organically compared to last year[25]

Think it’s too late to find true bargains in this raging bull market? You might be surprised.In fact, plenty of opportunities in low-priced stocks are waiting to be found.As of July 2024, more than 2,600 stocks are listed on major U.S. stock exchanges with a share price of $10 or less. Of course, many of these aren’t great investment options. Most penny stocks and low-priced names end up there due to major issues with the underlying businesses.But, some real diamonds in the rough can be found. Examine seven ...

While growth-centric ideas – particularly in the technology sector – generally attract the most attention, investors should pay attention to passive income opportunities. They’re not nearly as exciting as wagering on the next big thing. However, high-yield dividend stocks can keep your holdings elevated while you navigate the market’s ebb and flow.Fundamentally, dividend-paying companies give you a chance to come out ahead consistently. Picking winners and losers in the market is exactly what it sounds like ...

It’s not easy to find bargain stocks to buy when the stock market regularly keeps hitting new all-time highs. The S&P 500 is sitting above $5,431 at the moment, a 14% gain in 2024 and 23% higher than where it stood 12 months ago.Because a rising tide tends to lift all boats that don’t have holes in them, individual stocks are flying high too. A quarter of all stocks trading on the broad-market index have gained more than the index itself. More than 60% are trading in positive territory. That’s why contraria ...

Core Viewpoint - The article emphasizes the potential of investing in bargain stocks, which may offer higher rewards despite their associated risks, compared to more popular stocks that may have limited returns [1]. Group 1: Albertsons Companies (ACI) - Albertsons Companies operates in the consumer defensive sector, specifically grocery stores, and is currently facing challenges in its merger with Kroger due to anti-competitive concerns [2]. - Analysts rate ACI as a moderate buy with an average price target of $23.66, with the most optimistic forecast at $27.25 [2]. - The company has shown consistent financial performance, with a trailing-12-month net income of $1.3 billion on revenue of $79.24 billion, and is expected to see revenue rise to $80.23 billion in the current fiscal year [3]. Group 2: Magna International (MGA) - Magna International is a Canadian parts manufacturer for automakers, involved in designing and manufacturing components for vehicle manufacturers [5]. - The stock trades at 8.35X forward earnings, with anticipated earnings per share (EPS) of $5.68 for fiscal 2024, an increase from $5.49 the previous year [6]. - EPS is projected to rise to $6.87 in fiscal 2025, making it a candidate for bargain stocks [6]. Group 3: Ambev (ABEV) - Ambev, based in Brazil, operates in the consumer defensive space, producing and distributing beverages, including beer [7]. - Analysts have a consensus moderate buy rating for ABEV, with an average price target of $2.96 and a high-side target of $3.28 [7]. - The company has shown a strong financial performance with an average positive earnings surprise of 23.33% over the past nine months, despite a low forward earnings multiple of 12.87X [8]. Group 4: Visteon (VC) - Visteon operates in the automotive technology sector, providing automotive electronics and connected car solutions [9]. - The stock has a low price/earnings-to-growth (PEG) ratio of 0.85X, and analysts rate it as a moderate buy with an average price target of $140.36, potentially reaching $161 [10]. Group 5: Standard Motor Products (SMP) - Standard Motor Products focuses on manufacturing specialty components for the auto parts sector, particularly for hybrid vehicles [11]. - The stock trades at only 0.52X trailing-year revenue, but analysts project steady growth over the next two years, with a buy rating and a price target of $42 [12]. Group 6: Gilat (GILT) - Gilat provides satellite-based broadband communication solutions and operates in the technology sector [13]. - The company has an average positive earnings surprise of 175.6% over the past four quarters and trades at a trailing-year earnings multiple of 12.95X [14]. - Revenue is expected to rise to $313.9 million in fiscal 2024, representing an 18% growth rate from the previous year [14]. Group 7: Pinstripes (PNST) - Pinstripes operates in the consumer cyclical space, focusing on dining and entertainment with a unique concept [15]. - The company reported a net loss of $9.16 million on revenue of $116.7 million, but is experiencing quarterly revenue growth of 14.1% year-over-year [15]. - Analysts project a loss per share of 22 cents for fiscal 2024, with potential revenue growth to $178.83 million in fiscal 2025, making it a high-risk, high-reward investment [16][17].

Ambev S.A. (NYSE:ABEV) Q1 2024 Results Conference Call May 8, 2024 11:30 AM ET Company Participants Jean Jereissati - Chief Executive Officer Lucas Lira - Chief Financial and Investor Relations Conference Call Participants Isabella Simonato - Bank of America Felipe Ucros - Scotia Rodrigo Alcantara - UBS Lucas Ferreira - JPMorgan Robert Ottenstein - Evercore ISI Ben Theurer - Barclays Renata Cabral - Citi Ricardo Alves - Morgan Stanley Operator Good morning, good afternoon, and thank you for waiting. We woul ...

Core Argument - The US dollar's weakening value due to nearly $35 trillion in unpayable Treasury debt suggests investors should diversify portfolios overseas, with Ambev SA (ABEV) being a top foreign pick [1] - Ambev's undervaluation, combined with a weaker US dollar, could lead to a dramatic share price increase over 2-3 years, potentially doubling or tripling in price with a high 6.5% dividend payout [1] Weak Dollar Argument - Dedollarization in international trade is expected to continue over the next decade, driven by US deficit spending and potential economic recession risks [2] - The Brazilian Real has been gaining ground against the US dollar since mid-2020, with $1 USD now exchanging for $5.12 BRL, making foreign assets like Ambev more attractive [2] Ambev's Valuation - Ambev is currently at one of its cheapest valuations in 20 years, with a trailing dividend yield of 6.5%, the highest in the global brewery and distilled beverage industries [4] - Key financial ratios include price to trailing earnings (12.7x), sales (2.3x), cash flow (7.46x), and book value (2.26x), similar to recession lows in 2009 and 2020 [4] - Ambev's enterprise valuation metrics, such as EV to forward cash EBITDA (6.2x) and revenues (2.06x), are at 10-year lows, approaching 2009 Great Recession levels [6] Financial Metrics - Ambev's free cash flow yield is 10.1%, the highest since the 2009 global recession, and significantly higher than US large caps, which are yielding at or below 5% [7] - The company has a conservative balance sheet with more cash than debt (net $3 billion in cash), and gross profit margins exceeding 50% [5][8] Peer Comparison - Ambev is the least expensive major beer brewery or liquor distiller globally compared to peers like Heineken, Anheuser-Busch InBev, and Diageo [6] - Seeking Alpha's Quant Valuation Grade gives Ambev an "A," with key metrics like P/E Non-GAAP (TTM) at 12.45, 32.49% below the sector median [9] Earnings and Growth - Ambev's earnings estimates for 2024-26 show modest growth, with 2025 EPS expected to increase by 9.79% YoY, while sales are projected to grow steadily [10] - The company's stable business model and defensive nature make it desirable in a potential recession or market volatility scenario [9] Dividend Appeal - Ambev's trailing dividend yield of 6.48% is the highest since the company began paying dividends in 2006 and the strongest relative to the S&P 500 index [11] - The yield is also the highest among peer breweries and distillers, making it an attractive income investment with a sound balance sheet and strong profit margins [12] Upside Potential - A return to 10-year average financial ratios could push Ambev's share price to $4.00, offering a potential total return of +80% [15] - If the US dollar declines further and the Brazilian economy outperforms, price targets of $5 or $6 are possible, with total returns of +150% to +200% over 2-3 years [15] Downside Risks - A material decline in the Brazilian Real vs the US dollar or global financial turmoil could pressure Ambev's operating results and share price [14] - However, Ambev's current valuation is so cheap that it is expected to outperform the S&P 500 in a bear market scenario [14]