People are so foreseeable

When the stock market goes down, the "specialists" start talking about "defensive" stocks.

Estadão: Ações defensivas para tempos de crise

Defensive stocks, according to the article above, are the stocks that pay high dividend yields.

I heard the same story in 2008/2009, just when the not so "defensive" stocks where incredibly cheap.

I think the contrarian investment strategy is more alive than ever!

KLBN4 - Klabin

I tried to estimate normal cash flow for Klabin:

But I'm not sure about 3 points. Let me know what is your opinion.

Here is a guy who drunk from the source

Quanto mais a bolsa cai, mais ele compra

Here is where this guy took those ideas from.

Large Banks Compared

They are very similar, here goes some notes:

• BBAS3 had stock issuance, so earnings growth per share is less than 40.0%
• BBAS3 has less allowance for loan losses, but it has the minor delinquency ratio and more coverage ratio, so I think it's OK.
• BBAS3 has the best efficiency ratio, while ITUB3 has the worst. What a surprise!
• BBDC3 has more than 2/3 of its loan portfolio destined to corporate and almost 30% of its earnings comes from insurance. That's good!
• Be surprised again: ITUB3 has the worst ROE, while BBAS3 has the best one.
• Considering  Loan Portfolio/Shareholders’ Equity, we can say that BBAS3 is most leveraged, while ITUB3 is the less one. That could explain the profitability difference.

UGPA4 - Ultrapar

Another excellent company I always thought was over valuated is Ultrapar. But looking at cash flow you can see that in 2010 it earned "only" 765 mi, but have charged 530 in depreciation and another 135 mi in deferred taxes. So it created about 1,4 bi in cash! That is 26% over equity.

Ultrapar also invests a lot, but reading the report I believe (although I don't know how much) most of that investments are directed to growth.

That's another example of an excellent company that I had misunderstood, until I looked to its cash flow.

Now I think that I full understand this maximum: CASH IS KING!

DTEX3 - Duratex (Reviewed)

Although Duratex has being pressed by costs increase, I decided to take a closer look to its FCF (my favorite analyses now) because price has plunged.

You can promptly see that depreciation is very high, and has been growing. Investments is also high, but company is investing a lot to increase production capacity (growth). See, for example, what was the destination of total 2010 investments:

S.&P. Downgrades Debt Rating of U.S. for the First Time

You said you're missing the time of circuit breakers.
Well, I think that time has come again.
I just need to have the necessary patience not to buy too early...
Let's cheers this new time!

What we should buy

I've sold some small companies I had in my portfolio and all FIIs, just to focus on large companies. But it's very difficult to escape, at current moment, from banks and steel (BBAS, BBDC, ITUB, CSNA, GOAU and USIM).
So I made a search on largest companies today to see what could be bought.
I put the results in a Google Spreadsheet. You can have access here.
See what you think could be a valuable buy today.

I Love Reading these News

• Empresas elétricas são a luz no fim do túnel para a bolsa, diz corretora
• Queda das Bolsas europeias por medo da crise econômica
• Ibovespa em mais um dia de cão cai 6%; nenhuma ação em alta
• Ibovespa recua mais de 2% e investidor busca setores defensivos
• Com aversão a risco, brasileiro procura poupança em julho e captação é maior do ano
• “Há bastante combustível para a queda da bolsa continuar”, diz analista
• Carteira de ações para o mês deve ter companhias que paguem bons dividendos

• Pânico domina Wall Street e Dow Jones tem maior queda diária desde o fim de 2008

Ambev

I took a look at Ambev to determine its intrisic value (conservatively).

I projected a growth rate of 6% for 10 years and 3% from then on, with a discount rate of 7%.

My starting point was the average dividend payment from 2008 to 2010 (I took the numbers from the cash flow statements of those years).

Itau versus Bradesco

I'll also post BBAS figures when available for 2Q11.
I think that BBDC is getting better than ITUB.