Cactus: the American group designs, manufactures and markets drilling tools that it defines as being of high technicality, allowing more efficient and safer operations. This qualitative offering, available for sale or rent, has allowed it to post the best profitability in the sector, for years, with an average adjusted Ebitda margin of 34% since 2014, compared to 27% at its closest competitor. All this while now holding around 43% of the US onshore market, compared to 0.8% at its inception in 2011. Cactus' flagship product is the SafeDrill drill head system, which is augmented by an entire ecosystem sold as safer, more efficient and faster than any other device. Like the rest of the oil industry, 2020 was a tough year for Cactus, but it maintained decent results thanks to its flexibility. If we had to add two other assets to the dossier, we would have to mention the presence of the management and employees, who hold 22% of the capital, and the plans for expansion in the Middle East market. And two disadvantages: Cactus claims to be ESG in its investor presentations, but it operates in the controversial oil extraction and fracturing sector. And its valuation is a bit high at the moment, which is the counterpart of its intrinsic qualities.

Des Cactus d'un genre nouveau (Source Présentation Société)

Rothschild & Co: the small French investment bank has a special place among financial giants. It was the only European company on the global financial advisor podium in 2020, ranking 8th in terms of revenue. In terms of the number of deals, Rothschild was even ranked 2nd worldwide between Goldman Sachs and Morgan Stanley. Nearly two-thirds of its €1.8bn annual revenue comes from this M&A and financing advisory business. The remaining third comes from the two other business lines, private banking and asset management on the one hand (€78.1bn of assets under management at the end of 2020) and private equity/private finance on the other (€15.7bn committed). The bank is notoriously cautious in its strategy and has a large family shareholding, of which 35.4% is held by the Rothschild Concordia holding company. The company is not highly valued, as is the case in the sector, but it would be absurd to compare it to one of the major European generalist banks, given its specific characteristics. Moreover, the earnings trajectory is upward after an inevitably more complicated year in 2020, but which did not affect the group's momentum.

Bilan 2020 des principales banques conseil du monde (Source Rothschild & Co)


Let's stay in Europe, this time on the Austrian side, with this family-owned group whose logo you see regularly. Its lifting cranes are used in a large number of trucks. The company maintains a market share of between 30 and 35% in this segment, with products that enjoy an excellent reputation. Its main markets are Europe (57% of revenues) and North America (21%). It is also active in marine cranes, both in materials handling and in the offshore wind industry, and in other niche businesses such as launching cranes, rail maintenance cranes and logging hooks. Its markets are rather oligopolistic, but not devoid of competition between well-honed players. Profitability is solid, as Palfinger hopes to achieve a double-digit operating margin by 2023/2024. Debt is well covered, ROE is high, and P/E is expected to fall from 20x in 2020 to 15.7x this year and 12x in 2023. The multi-sector economic recovery has boosted targets. The stock has high Marketscreener ratings. It is the smallest capitalisation in our selection (€1.4bn), with a fairly small market (7,200 shares traded per day on average in August).
Une gamme destinée à plusieurs secteurs terrestres et maritimes (Source Présentation Société)
A range intended for several land and maritime sectors (Source: Company presentation)