10 Best Defensive Stocks To Buy Now

3. Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR)

Stock Price as of August 16: $7.46

Average Analyst Price Target Upside as of August 16: 43.23%

Centrais Elétricas Brasileiras S.A. – Eletrobrás (NYSE:EBR) is the largest power utility company in Latin America and one of the largest in the world. With a generating capacity that constitutes 23% of Brazil’s total, the company focuses heavily on clean energy, with 97% of its capacity derived from low greenhouse gas emission sources.

Up until 2022, the Brazilian federal government held over 50% of Eletrobrás’ (NYSE:EBR) shares, which were reduced to nearly 40% in 2022, adding international investors such as GIC Private Limited and the Canada Pension Plan Investment Board. Nevertheless, the company’s voting structure ensures that the federal government retains majority control over the company.

According to the company, it had an installed generation capacity of 44,654.5 megawatts (MW), making up 22% of Brazil’s total capacity, by the end of 2023. The capacity distribution includes 65% from fully owned projects, 33% from Special Purpose Entities (SPEs), and 2% from joint ventures. The company increased its capacity by 2,095 MW in 2023, including new additions and consolidations, though it also experienced a 128 MW decrease due to a share swap.

Eletrobrás’ (NYSE:EBR) capacity is predominantly low in greenhouse gas emissions, with 94.6% derived from hydroelectric sources. It holds 36% of Brazil’s low-emission capacity. In early 2024, the company sold its coal and natural gas thermoelectric assets as part of its commitment to achieving net zero emissions by 2030.

Eletrobrás (NYSE:EBR) has been covered by 10 analysts and all of them maintain a Buy-equivalent rating on the stock. The average price target of $10.68 represents a 43.23% upside to August 16 levels, making it the 3rd best defensive stock to buy now.

On July 17, Goldman Sachs started coverage of Eletrobrás (NYSE:EBR) with a Buy rating and a target price of $10 per share, as reported by The Fly. The firm believes that utility companies in Brazil are currently undervalued and it sees a good chance for the company to invest in new projects with promising returns. The firm noted that Eletrobrás (NYSE:EBR) and another recently privatized company, Copel, are expected to reduce costs and improve their operations, and they could increase shareholder returns with higher dividends in the next year.