(BFM Bourse) – On the basis of several criteria, the independent research firm AlphaValue has selected a dozen French stocks “which could escape the worst of the current political chaos”.
French stocks experienced a notable surge last week. Weighed down by the political uncertainty caused by the dissolution of the National Assembly, the CAC 40 lost 6.2% over the whole of last week.
Investors fled French stocks and the cyclical securities most exposed to France suffered. In particular the audiovisual groups TF1 and M6, which suffered in addition to the threat of privatization of public broadcasting by the National Rally, if it came to power. Which would put pressure on revenues from the advertising market, since France Télévisions, for example, would have to replace its subsidies with advertising revenue, in such a scenario.
Other sectors found themselves under pressure, such as banks, motorway concessionaires and even alcohol companies.
In this context of aversion to risk and to French values in particular, what actions can constitute a semblance of refuge?
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Thirteen values retained
The independent research firm Alphavalue asked the question in a note published Friday. “For investors stuck in French exposure bonds, the time has undoubtedly come to take their legs, but what legs?”, he underlines.
The research office sifted through the 96 French stocks on its cover to select a selection of titles “which, on the basis of simple data, could escape the worst of the political disorder”.
In the end the list is as follows: Hermès, Legrand, Sanofi, L’Oréal, Capgemini, LVMH, Edenred, STMicroelectronics, Dassault Systèmes, Virbac, Bureau Veritas, Airbus and GTT. That’s thirteen values in total.
Alphavalue retained several criteria: the stock’s potential for growth in relation to the research office’s price target (which is positive with the exception of a single stock in the selection, L’Oréal, with -4, 86%), the credit risk assessed by Alphavalue, the strength of the fundamentals with a score out of 10 (this ranges from 8 to 10 for the selected values, Hermès, L’Oréal and GTT being at ten), as well as the number of Consecutive years of dividend increases (from two for GTT and Airbus to 17 for Hermès, Legrand, Sanofi and l’Oréal), a way of measuring the resilience of the coupon. The research firm also took into account the estimated revenue exposure to France, a figure which ranges from 20% for Capgemini to 3.2% for GTT.
“The market capitalization could have been added, but we would have only had Hermès and LVMH,” explains Alphavalue.
Luxury and quality actions
We therefore note the significant presence of luxury, internationalized values with solid business models and balance sheets. But also tech, with Dassault Systèmes and STMicroelectronics typically being companies globally exposed to underlying mega-trends (electrification and relocation of value chains for STMicro, digitalization and industry 4.0 for Dassault Systèmes and even for Capgemini).
Companies with unique positions are also present. This is the case of Edenred, a company which has been able to invest in its technological platform and diversify beyond restaurant and gift titles, where the potential for growth, particularly in SMEs, is nonetheless significant. We can also cite Bureau Veritas, one of the leaders in ICT (testing, inspection and certification services), driven by more and stricter standards, or Airbus, in a quasi-duopoly situation facing an ultra-weakened Boeing on commercial aviation.
Or even GTT, the manufacturer of cryogenic membranes, which is benefiting massively from the boom in liquefied natural gas. Last year, this former Engie subsidiary posted growth in turnover of 39%, to 428 million euros, and its order book reached a record level. Cumulatively, on its main activity, GTT displays one of the orders representing 1.815 billion euros from 2024 to 2029.
Julien Marion – ©2024 BFM Bourse
