We are conducting a significant arbitrage in the European portfolio by taking our profits from predominantly cyclical stocks whose prospects are becoming uncertain in the current context. These sales include Grieg Seafood (GSF), Moncler (MONC) and Hexagon (HEXAB), with gains of +9.0%, +61.7% and +3.2% respectively.
On the other hand, we are entering three stocks with rather defensive and qualitative characteristics: Iberdrola (IBE), Eiffage (FGR) and Ipsen (IPN).
Here is a brief presentation of these companies. You will soon find a detailed analysis in your Stock Picks section, only available to subscribers.
Iberdrola is a Spanish group, which is one of the European leaders in the production of electricity and gas. In addition, the group is the world's leading producer of wind energy, which accounts for 6% of its turnover. It operates mainly in Spain (40%) and Mexico (33%), followed by the United States (14%), the United Kingdom (9.5%) and Brazil (2.4%)
Although very defensive, the business has posted solid and profitable growth, which has caught the eyes of analysts whose revisions are sharply increasing, as reflected in the company's Surperformance© Ratings. Finally, its debt remains perfectly under control for a company in the utilities sector.
Eiffage is the number two French company - behind its compatriot Vinci - in infrastructure & works (BTP) and concessions. More precisely, it carries out one third of its activity in the construction of transport infrastructure (roads, bridges, etc.), 25% in electrical, climatic and mechanical engineering installations, around 25% also in construction (housing, offices, etc.) and 17%, finally, in concessions (motorways, airports, railways). Almost all of the Group's revenue is generated in Europe, almost 75% of which is generated in France.
The stock, currently cheap compared to its average, is one of the best rated in the sector in MarketScreener’s Stock Screener. The company is extremely well positioned in terms of visibility, results, consensus, as well as revenue and earnings revisions. It should enjoy good momentum in the short and medium term.
Ipsen is a French pharmaceutical company specializing in oncology (cancers) and controlled by the Beaufour family. In addition, it has a portfolio of so-called "family health" medicine brands that represent around 13% of turnover, sold in pharmacies under brands such as Smecta and Forlax.
Ipsen is the French "nugget" of the sector, but it has been very hard hit on stock markets in recent months. Its price has been halved since its peaks. This is therefore our bet that we will recover from this arbitration. We believe that this level of valuation is now disproportionately low for such fundamentals. Despite the risks posed by generic drugs, the company is expected to post solid growth in the coming years, with exceptional net profitability expected to exceed 20% in 2021.