Why Ultrapar Is Poised to Keep Bouncing Back

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Brazilian liquefied petroleum gas distributor Ultrapar Holdings (NYSE: UGP  ) has earned a coveted five-star ranking.

With that in mind, let's take a closer look at Ultrapar, and see what CAPS investors are saying about the stock right now.

Ultrapar facts

 

 

Headquarters (founded)

Sao Paulo, Brazil (1937)

Market Cap

$12.8 billion

Industry

Oil and gas storage and transportation

Trailing-12-Month Revenue

$27.1 billion

Management

CEO Thilo Mannhardt

CFO Andre Covre

Return on Equity (average, past 3 years)

16.7%

Cash/Debt

$1.0 billion / $2.9 billion

Dividend Yield

3%

Competitors

Dow Chemical 

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 97% of the 115 members who have rated Ultrapar believe the stock will outperform the S&P 500 going forward.

Just last month, one of those Fools, djohn1969, succinctly summed up the Ultrapar bull case for our community:

[W]idely held by Brazil's own retail investors as a "safe" growth and income play and has consistently performed very well despite the Brazil government's apparent attempts to destroy its own strongest companies. ...

Perhaps it's because the company's products and services are so integral to the day-to-day lives of Brazilian citizens and the Brazilian government is focused on lifting Brazilian citizens out of extreme poverty and protecting them from pains such as inflation. In other words, the same nationalist issues that hurt [Petrobras (NYSE: PBR  ) , Vale, etc. seem to be actually helping UGP. Simply put, Brazilian citizens are much more directly affected by petro and propane distribution (Ultrapar services) than they are by iron ore (VALE) or crude oil recovery (PBR). ...

With that said, the stock has had quite a run so I probably wouldn't open a new position until after the next earnings release (I already have my full position). I also recommend a significant amount of due diligence to understand what the company does, where it operates (not just Brazil), etc. prior to buying since it is typically harder to understand and keep up with foreign companies.

If you want market-topping returns, you need to put together the best portfolio you can. Of course, despite its five-star rating, Ultrapar may not be your top choice.

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