Babcock (100% positive reviews, 8 analysts)
Babcock is a British engineering company specializing in critical services for the defense, aerospace, and security sectors. The company initially produced industrial boilers before diversifying into naval and nuclear infrastructure. Babcock's business model is based on long-term contracts with public bodies, particularly the UK Ministry of Defense. The UK accounts for 70% of its revenue. The group's activities include naval base management, Royal Navy ship maintenance, pilot training, and maintenance of British nuclear submarines. Following a series of refocusing measures, the company now derives three-quarters of its revenue from the defense sector, an industry whose budgets have been significantly replenished in recent months.
Babcock has caught the attention of investors thanks to a series of increases to its revenue and earnings forecasts. The company has relatively low multiples compared to the defense sector, despite its recent upward trend. This discrepancy has long been justified by lower margins and an uninspiring business linked to sluggish British defense spending. Both problems are now being resolved.
Cadeler (100% positive opinion, 7 analysts)
This Danish company, which was founded in 2008, specializes in installation, operation, and maintenance services for the offshore wind industry. It is one of the few specialized players in the sector thanks to its fleet of jack-up vessels designed for the transport and installation of turbines and foundations at sea. These are extremely impressive vessels, which are both factories and floating cranes. In 2023, Cadeler strengthened its position by merging with its American counterpart Eneti. The duo claims to have built more than 800 foundations and installed more than 1,000 wind turbines since their inception.
Cadeler is listed on the Oslo (CADLR) and New York (CDLR) stock exchanges, but not in Copenhagen, its home port.
The company's business model is based on providing turnkey solutions for the transport and installation of offshore wind turbine components, as well as maintenance and decommissioning services. The company operates mainly in the North Sea and surrounding regions, where it has established long-term partnerships with energy suppliers. This geographical positioning helps to mitigate the turmoil surrounding the Trump administration's hostility towards wind power, which has caused the stock to fall by 30% over the past six months.
Cadeler has solid growth levels, a relatively reasonable valuation and a sound track record of high-quality financial reports. On the downside, debt has been inflated by the Eneti transaction and investments in the fleet, and investors seeking high returns will move on.
GTT (100% positive opinions, 6 analysts)
The French group is something of an anomaly in the economic landscape, with its position halfway between an oligopoly and a monopoly in the design of cryogenic membrane containment systems for the transport of liquefied natural gas (LNG). The shipbuilding company was founded in 1994 through the merger of Gaztransport and Technigaz. At the time, its co-shareholders included GDF (now Engie), Total (now TotalEnergies) and the offshore services division of Bouygues (since sold to Saipem). GTT became independent when it was listed on the stock exchange in 2024. Engie sold its remaining shares last year.
GTT's business model is based primarily on the sale of licenses for its patented technologies, which enables it to generate very high margins. Its attempts at diversification have not really been successful so far, as demonstrated by the Elogen venture, which ended painfully. The fundamentals remain impressive: growth, profitability, balance sheet... everything is top notch. The question remains as to whether it can maintain its dominant position, which has been THE issue for decades, since there is nothing to prevent competitors from coming in and taking a bite out of GTT's market share. So far, they have been unsuccessful, as we know.
