Ambev S.A (BSP:ABEV3) closed the last trading session at $3.24. The 52-week range has been between 2.50 and $3.95. The expected growth rate is at 7.86% after the company weathers the current inflationary pressures. The price is trading at a forward PE ratio of 21.52 while the PEG is at 2.74. While the ratios point to a potentially overvalued stock, Zacks rates the company a buy.
The sentiment on Ambev S.A is consistent with the increased attention towards value stocks. Three factors make value stocks more attractive. First, bears continue to hammer on the stock markets, affecting the popular and highly active stocks, especially in technology.
Second, increases in interest rates hit the bond markets, leading to declining yields. Third, commodity stocks like those in oil and grains have come to full valuation; hence investors are seeking value elsewhere. Companies like Ambev S.A will, therefore, record increased trading activity in the coming days.
Ambev S.A is attractive for two more reasons. The current valuation of $3.24 creates the possibility that a slight increase in trading activity would send the stock fluctuating rapidly. Traders make money when the volatility is high.
Besides, the company is in a consumer defensive industry, meaning that it will continue to have high demand. Holding the stock will certainly attract handsome gains for the investor.
Ambev S.A set to rally as MA-10 crosses above MA-50
Source – TradingView
Analysis of the price chart confirms bullish momentum for the stock. Though Ambev S.A may face slight resistance at $3.30, the stock will break through the level, pushing the 10-day moving average above the 50-day.
This would trigger a buy signal for many investors interested in making a profit from a short-term price rally. The rally would push the valuation to levels between $4 and $4.50.
Ambev S.A is a value stock to watch. As bulls take control of the stock, the price could rise above $4 in the coming weeks. Ambev S.A is, therefore, a recommended buy.
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