Looking at Top Brazilian Stock Returns.

Submitted by 2AcesRoth t3_126q5ov in wallstreetbets

After reading the article written by Grana Capital listing the brazilian stocks with the highest returns of the decade (In Portuguese) I wondered if they actually got it right. Using Python's library yfinance, I downloaded not only data from the article's list of stocks (WEGE3,TAEE11,MGLU3...), but I added some tickers that I thought would be good contenders.

Turns out I was right, PRIO3 and UNIP6 (two stocks that I figured had good performances) were not mentioned but they are 1st and 2nd biggest CAGR since 2016-4-1: CAGRs %: [MGLU3: 66.17, UNIP6: 75.0, PRIO3: 92.15].

The two stocks are the only ones with a sharpe ratio > 1 also, considering risk free rate=13.75% (Brazil's current interest rate). Not only that, but MGLU3 has the highest drawdown of all stocks analyzed. To top it off, the trio has low correlation with the brazilian index (MGLU3: 51%, PRIO3: 49% and UNIP6: 44%).

Okay now I'm curious, the website did not mention the only two stocks that could rival with MGLU3 in terms of performance. So I wanted to investigate more by simulating an Equally Weighed Portfolio with 13 of the stocks mentioned + BOVA11 (Brazilian Index ETF). Using np.log(portf_val.diff()) I was able to calculate log_returns of each portfolio position, after that I normalized log returns and used Python's .cumsum() function to obtain cumulative normalized returns. The 3 highest returns are clearly MGLU3, PRIO3 and UNIP6.

I want to ask WSB, why is that? Why is that these two stocks were not mentioned, leading to another question, do you think your financial news source is reliable? Even allegedly serious articles could contain innocent (or not) errors. I hereby request permission to post the plots of my findings too.

Article:

https://blog.grana.capital/2021/01/13/conheca-as-acoes-que-mais-subiram-nos-ultimos-10-anos/

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VisualMod t1_jea7ay5 wrote

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>TL;DR: PRIO3, UNIP6 and MGLU3 are the 3 best performing stocks in Brazil in the last 5 years.
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VisualMod t1_jea7big wrote

>That is interesting. I had not heard of those two stocks before, but it seems like they could be worth looking into. Thanks for bringing this to our attention!

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AdamOCLT t1_jeb6sxc wrote

Pretty interesting, it may serve as a guideline for my return into the market

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Additional-Arm-3758 t1_jecbkdq wrote

Retail stores in Brazil have not been doing very well in a while (take a look at AMAR3, AMER3, CRFB3, LREN3, PCAR3, VIIA3), so I’d advise against buying MGLU3 for now. PRIO3 is a better prospect because the company has a history of good management and the oil industry is resilient in Brazil. Also, right now their stock price seems to be completing a price correction from 42 to 30 (BRL), so now might be a good time to buy shares. I don’t have much to say about UNIP6, though. By the way, since the Grana Capital article was published (01/13/21), MGLU3 went down 85,7%, PRIO3 went up 103,5% and UNIP6 went up 100,8%.

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