Ambev: One of the Highest-Quality Staples Stocks
With dominant market positions in Latin America and best-in-class EBIT margins, wide-moat Ambev is a stock investors should keep an eye on.
Ambev: One of the Highest-Quality Staples Stocks
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Philip Gorham: Ambev (ABEV) is among the highest-quality businesses in our consumer-staples coverage. It essentially operates in five core Latin American markets where it holds monopolistic-like positions.
It has a 68% market share in Brazil, the third-largest beer market in the world; 75% in Argentina; and in three other markets, it holds market share above 90%. That very strong industry positioning feeds through to its margins. It generates best-in-class EBIT margins, north of 40% and almost 50% in Brazil.
The stock has been up a little bit the last month or so. It's not at exactly where we would like to buy it, but we think any further volatility, particularly around sentiment in Brazil, may provide investors with a very attractive opportunity in the near term to buy into a high-quality business.