One of the most important concepts for successful investing is portfolio diversification. In the event one has $100 or even $100,000 to invest, one needs to apportion investment capital according to risk appetite and gain exposure to multiple asset classes, such as equities, bonds, gold, real estate, and cryptocurrencies.
Further, one’s stock exposure should include companies across sizes and sectors. For example, a blue-chip large-cap company such as Verizon (VZ – Get Rating) will offer investors a generous dividend yield. In contrast, a growth stock like Roku (ROKU – Get Rating) will help grow wealth at an attractive rate over time.
One can also diversify a portfolio by purchasing shares of companies such as Banco Bradesco (BBD – Get Rating) that have a bulk of their operations in another country, further diversifying overall risk. So, let’s see if Banco Bradesco stock should be part of one’s portfolio right now.
An overview of Banco Bradesco
Brazil-based financial giant, Banco Bradesco is valued at a market cap of $36 billion. The company provides several banking products and solutions to individuals and businesses in Brazil and other international markets.
BBD operates through Banking and Insurance business segments, while providing demand and time deposits, mutual funds, savings deposits as well as overdrafts, credit cards and loans. Banco Bradesco offers primarily leasing, brokerage, investment and private banking, pension plans, capitalization bonds and consortium management services. It also provides auto, health, life and non-life insurance products.
As one of the largest financial companies in Latin America, Banco Bradesco’s recurring net income in the first half of 2021 stood at $2.31 billion, while its return on equity was also impressive at 18.2%.
With more than $300 billion in total assets, the company’s expanded loan portfolio stood at $131 billion. Its insurance business generated net income of more than $415 million in the first half of 2021 and ended the quarter with $61.8 billion in total assets. Its premium contributions stood at $4.2 billion in the first half of 2021.
What next for Banco Bradesco stock?
Banco Bradesco has grossly underperformed the broader markets over the last decade. The stock has declined by 2.2% in price since October 2011 versus the S&P 500 345% returns. In the last five years, the stock is down 14% compared to index returns of 122%.
The company’s sales and earnings have fallen over the past few years, which has also negatively impacted its stock price.
However, analysts tracking the stock expect Banco Bradesco sales to rise by a marginal 0.7% to $19.49 billion in 2021 and by 8% to $21.05 billion in 2022. Its adjusted earnings per share is also forecast to rise from $0.39 in 2020 to $0.59 in 2022.
News Source: Stock News