Growth stocks have done well in recent times, with many of them doing double-digit growths in the past few years. But with the looming interest rate hike, inflation, plus other factors, it might be wise for inventors to reconsider their priorities and fill their coffers with more value stocks. The value stock we have for you today is Petróleo Brasileiro (NYSE: PBR), or Petrobras.
Source: Jan-Rune Smenes
The world is starting to emerge post-pandemic, and more importantly the lockdowns that accompanied them. What this means is that economies are starting to reopen fully, and people are going back to their lives as they did pre-pandemic. This is good news for Petrobras.
Petrobras operates in the Brazilian energy sector, drilling, refining, and processing some of the earth’s most precious liquids, crude oil, and its by-products. And with economies back open, the demand for these energy sources will only rise, and very likely taking PBR with it.
Source: Petrobras
Every financial metric is looking good for Petrobras at the moment. In the quarterly report it released for Q3 FY2021, the company lowered its gross debt to $59.6 billion, hitting a target of <$60 billion that was originally set for 2022. Its free cash flow increased by 20% from $7.5 billion. Recurring adjusted EBITDA also increased to $12.2 billion from 6.9 billion in the same period last year.
Petrobras is a steal right now with a PE ratio of 3.1, less than a third of the market, and a quarter of the oil and gas industry in Brazil.
Technical Analysis
PBR looks to be making a breakout from the $12.1 – $12.8 resistance level, with a clean supporting trendline holding it aloft. If this breakout isn’t a false breakout and that resistance level becomes support, the next resistance level is 33% away from the support level at $17 – $17.5. That’s a positive outlook for the stock.
But as we all know, nothing is certain stock market. The stock could make a reversal to the $9 – $9.5 support level, breaking the support trendline in the process. Although that may cause us to take another look at the stock, it only means PBR is giving investors better buying opportunities as long as the fundamentals remain as good as they have been
