Recs

6

5-Star Stocks Poised to Pop: Sabesp

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Brazilian water utility Sabesp (NYSE: SBS  ) has earned a coveted five-star ranking.

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

Sabesp facts

Headquarters (founded) Sao Paulo (1954)
Market Cap $6.6 billion
Industry Water utilities
Trailing-12-Month Revenue $5.9 billion
Management

CEO Dilma Pena (since January 2011)

CFO Rui Affonso (since July 2003)

Return on Equity (average, past 3 years) 9.8%
Cash/Debt $1.36 billion / $5.06 billion
Competitors Veolia Environnement (NYSE: VE  )

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 99% of the 1,071 members who have rated Sabesp believe the stock will outperform the S&P 500 going forward. These bulls include ts2006 and TMFBiggles.

Earlier this year, ts2006 succinctly summed up the Sabesp bull case: "water services in Brazil -- looks to grow and maintain profitability."

Currently, Sabesp even sports a cheapish forward P/E of eight. That represents a slight discount to competitor Veolia (9) and a much larger one compared to industry peers American Water Works (NYSE: AWK  ) (16) and Aqua America (NYSE: WTR  ) (21).

CAPS member TMFBiggles elaborates on the bargain opportunity:

P/E is less than HALF that of AWK. ... [L]arger service area, much greater potential for future deployment (really, how many people in the US are without running water, vs. people in Brazil?). ...

The only real worries are from political cronyism ruining its expansion plans or profitability, as the state of Sao Paulo owns half the company, but it's a monopoly provider to one of the wealthiest areas of Brazil, and it's not limited to that state, so could expand to the rest of Brazil in the future.

I think SBS could be very valuable down the line as not only a water/wastewater provider but a water exporter to other regions from the Sao Paulo operations, but that's just a theory.

What do you think about Sabesp, or any other stock for that matter? If you want to retire rich, you need to put together the best portfolio you can. Owning exceptional stocks is a surefire way to secure your financial future, and on Motley Fool CAPS, thousands of investors are working every day to find them. CAPS is 100% free, so get started!

Interested in another easy way to track Sabesp? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Aqua America. The Motley Fool owns shares of Veolia. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1547345, ~/Articles/ArticleHandler.aspx, 12/22/2014 7:13:41 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Brian Pacampara
TMFEZMagic

I take a look at big 10% moves, as well as stock-shaking analyst calls, on a daily basis for The Fool. While I don't believe in active trading, closely monitoring Mr. Market's mood swings can help identify long-term opportunities.

Today's Market

updated 2 days ago Sponsored by:
DOW 17,804.80 26.65 0.15%
S&P 500 2,070.65 9.42 0.46%
NASD 4,765.38 16.98 0.36%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/19/2014 4:01 PM
SBS $6.42 Up +0.13 +2.07%
Companhia de Sanea… CAPS Rating: *****
AWK $52.36 Down -0.59 -1.11%
American Water Wor… CAPS Rating: ****
VE $17.80 Down -0.30 -1.66%
Veolia Environneme… CAPS Rating: *****
WTR $26.03 Down -0.34 -1.29%
Aqua America CAPS Rating: *****

Advertisement