Companhia Energética de Minas Gerais (CIG) On The March

Really cheap Brazilian utility player here with a great dividend and excellent profitability. Again, because of the excellent dividend as well as the lack of any real opportunity in its options markets, we decided to go long stock. Although shares have rocketed out of their 2020 lows, the weekly chart and specifically the low stochastics definitely point to more upside here. CIG is undergoing significant elevated investment in the next few years which should really move the needle for this firm. In fact, the almost 10 billion Brazilian Real of earmarked divestments will obviously affect profitability in the near term but these liquidations should in no way overshadow the 22+ billion Real of core-based investments scheduled to take place over the next 3 to 4 years. Suffice it to say, going forward, it is all about increasing shareholder capital so more returns can be made off that very same capital. 

Upmove coming in CIG

Upmove coming in CIG

Verdict & Plan Going Forward for CIG: We will make a decision on CIG when the weekly stochastics return to oversold conditions. Utility companies are slow burners in that one does not see the same types of capital gains compared to other sectors in the long run. 

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