The world health crisis caused by the coronavirus is also affecting the entire planet economically. At the stock market level, the falls were a constant during the months of March and April. The Ibex, with a decrease of almost 29%, was the most affected indexIn Europe, the Euro Stoxx fell 23%, compared to -18% for the S&P, or -17.60% for the Nikkei. The volatility, furthermore, seems to promise that it will accompany the markets in the coming months. But, despite this situation, some of the most refuted value managers manage to find value. These are his bets:
WH Smith: The bet of Javier Rillo of Ibercaja Gestión is this British retailer with more than 200 years of history. Its capitalization exceeds 1,400 million pounds and its current market value loses almost 60% in 2020, to 1,084 pounds. The company has two divisions, a so-called high street and oriented to shops and stores at street level; and another travel retail, focused on airports, hospitals and service areas. Together they earn £ 1.4 billion in revenue and a return on capital of 20%. At the end of 2019, the debt in Ebitda terms was less than once its book value.
B&C Speakers: The Italian company chosen by Antonio López, from March AM, has designed, produced, distributed and sold professional electro-acoustic transducers since 1946 and has been listed on the Milan Stock Exchange since 2007, with a capitalization of more than 112 million euros, at a price per share. of 10.25 euros. These transducers are used as primary components in acoustic systems (loudspeaker components). Its sales under three brands, B&C Speakers (75%), Eighteen Sound and Claire (25%) reported revenues of 56 million in 2019, which represented an increase of 3.5% compared to the previous year and an Ebitda of 12 , 6 million, 15% more than in 2018. It is a family business without debt in which the owner owns more than 50% of the shareholding.
Neurons: The Carlos Val-Carreres selection of the Value Strategy Fund is an IT company also of a family nature in which its founder controls 60% of its shareholders. Its capitalization is 510 million, with a price per share of 21 euros. Its client portfolio is made up of 80% of the CAC’s listed companies. Among them, Carrefour, AXA, BNP Paribas, Engie, Société Générale or LVMH. It has 70% recurring income, with more than 25 years of organic growth and a cash level of 46% of its market capitalization. According to Val Carreres, its stock market potential could reach 20% per year between 2020 and 2024.
Ahstead Group: The company selected by Tomás Pintó is dedicated to the rental of industrial equipment and is part of the FTSE 100. After reducing its value in March and April, due to the Covid-19, it has managed to overcome it and has already added almost 3% since 1 January. Its total capitalization is over £ 11 billion. According to Pintó, Ahstead stands out for its capacity to generate cash at adverse times and for its large margin for future growth.
Maire Tecnimont: Juan Huerta de Soto, from Cobas AM also selects a family business, in which its founder and president protects 51% of the shareholders, and with little debt. Despite this, Maire Tecnimont shows a high indebtedness relative to its capitalization as a result of an oscillation of its working capital by Covid-19. It is a leading company in engineering and construction of petrochemical plants, fertilizers and refining, which is listed on the Milan Stock Exchange at a price of 1.41 per share until reaching a capitalization of 463 million, after losing 70% of its value. in three years. It stands out for its more than 1,300 accumulated patents and for its focus on R&D.
S&U PLC: The British car sub-prime credit company chosen by Alejandro Estebaranz, of True Value, is trading at £ 1,630 per share after falling 23% in 2020 and reaching almost 200 million capitalization. Estebaranz highlights the bad propaganda of the term “subprime”, but ensures that these companies grow in periods of crisis, increasing their income and improving their business. In addition, the manager considers that it is trading at a low PER due to the risks associated with Brexit, its low liquidity in the Stock Market and the current economic crisis environment. Estebaranz believes that it has great growth potential, despite its double-digit growth in recent years. Like the previous options, this is a family company in which its management team controls 70% of the shares.
Catalan West: The insurance company selected by Javier Ruiz, from Horos AM is one of the few Spanish securities included in this list. With a price per share of 20.30 euros, after dropping more than 30% in 2020, it has a capitalization of over 2,000 million euros. The insurer occupies the second position worldwide in credit insurance and the fifth in traditional insurance in Spain. Ruiz highlights its consolidated position in both divisions and considers that the company is excessively punished in the market. Compared to other insurers, the Horos investment director highlights his greater discipline and the fact that he has not abused growth in recent years, making gradual purchases from other companies in the sector without having to resort to a single capital increase.
Rovi: It is not surprising that Lola Solana, from Santander AM, has selected a pharmaceutical value, one of the sectors that has best resisted the impact of the coronavirus and is expected to benefit from this crisis. With a capitalization of almost 1,300 million euros, the company is trading at 23.10 euros per share. The company’s objective is to double its 2018 sales in 2023 and multiply its Ebitda by 2.3. In addition, it has an ambitious internationalization plan for the commercialization of its drugs and ISM manufacturing technology for third parties.
Maersk Drilling: The Danish company dedicated to oil platforms and chosen by Fernando Bernard, from azValor, has been hurt in the Stock Market by the collapse of crude oil. So far in 2020, it has plummeted 68% to reduce its value to just over 6,300 DKK (853 million euros) and a price per share of 19.60 euros. Only a year ago it was trading at 57 euros. Bernard’s selection of this value is based on his forecast of oil price recovery.
ABinBev: The Belgian brewer selected by Manuel Rodriguez de Mapfre AM has a market value of 70,000 million euros, and has had a drop in the Stock Market of over 40% since January, to 42 euros. A level that implies a ratio over ebitda of 10 times, below 12 times in historical average. The company’s cash flow of 13.4 billion represents more than 40% of its Ebitda, ahead of Coca Cola, Nestlé or Proter & Gamble, stock giants that stand out for their cash flow. In this time of confinement, the Mapfre AM manager highlights its ability to ship to your home.
Miquel and Costas: Iván Martín, from Magallanes Value Investors, focuses his bet on the Spanish paper mill. With a price of 13.32 euros per share, it falls 20% from January to a value of 412 million euros. Miquel y Costas exported in 2019 90% of its production, divided between industrial papers (56%) and tobacco (44%). It is a family company with an Ebitda margin of 17%, in its industrial paper division, and 29% in the tobacco division. Its friction stands at 10% and 25%, respectively. His clients include Chanel, Inditex, Imperial Brands, Tous and Hornimans. Its potential is between 33% (in its negative spectrum) and 92%.
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