Adjust the portfolio facing the Economic recovery which is expected to continue in the first half of 2022 has been the objective set in the latest review of the Eco30, which concentrates some thirty international quality values chosen by the Economist, and that Stoxx calculates as an index since 2013.
To do this, the indicator has decided reinforce in cycle with the component of mobility and for this it has opened the door to two French companies in the industry: Faurecia, which develops, manufactures and markets equipment for car manufacturers and Rexel, which distributes electrical equipment for heating, lighting and plumbing, but also energy products and services renewables and efficiency.
Likewise, the weight of the pharmaceutical sector has been reduced with that of Takeda and the generation of cash offered by Nintendo has been renounced due to the uncertainty that supply problems are generating and due to doubts that its model Switch does not just have the pull expected. Both firms will stop trading on the indicator on Monday, December 20.
As a consequence of these changes, the selective increases its leverage slightly (from 1.4 times to 1.7 times) although it continues to remain below a worrying level of 2 times; Y purchased with an average discount of 36% against the American and European stock markets if the estimated profits for next year are taken into account.
Starting from an average PER (number of times that the profit is included in the share price) of 11.3 times, the profitability expectation of the Eco30 Stoxx companies stands at 8.8% compared to 6.5% of the European market and 4.8% of Wall Street. This percentage exceeds the 7% that the most classical financial theory defends as the absolute return to which an investor in equities should aspire over a long period of time.
In this way, in the absence of a year until the tenth anniversary of its creation is fulfilled, the index appreciates around 112%, thus complying with the first part of the golden rule of doubling the investment in a decade and quadrupling it in twenty years as a consequence of compound interest.
Another attraction of the portfolio is its dividend yield forecast for 2022, 3.8%, compared to the Stoxx600 and the S&P 500, with 3% and 1.8%, respectively.
On the other hand, it provides a 12-month upward potential close to 30% (compared to the 12.8% that the Bloomberg consensus foresees for the European stock market and the 10.3% that it grants to the United States).
On the other hand, the Eco30 Stoxx also offers the higher earnings growth expected for the triennium: 142% for the period 2020-2023. This increase remains at 119% for the European stock market reference and at 79% for the American one.
Sector diversification
Regarding the sectoral composition, the new Eco30 continues to have four members (the maximum possible by principle of diversification of the portfolio) from two sectors: the technology and electronics industry, Murata, SS&C Technology, Marvell and Micron; and that of the automobile and mobility sectors, where Stellantis and Volkswagen were already listed and which is gaining weight with the additions of Faurecia and Rexel, which have room to advance 41% and 27%, respectively, to their target price. On the other hand, Stellantis will star, if the FactSet forecasts are met, the largest increase in earnings until 2023, 610% to 13,222 million euros.
Two sectors remain with three members: industrial (Hitachi, Quanta Services and Samsung, which offers the highest level of treasury in the index and the highest number of purchase recommendations together with Micron) and oil (Marathon Petroleum, Suncor Energy and Total Energies).
With two companies each is the health sector, now without Takeda, with two representatives, Encompass Health and Sanofi; as well as consumption and services, where do British American Tobacco continue? Which offers the highest dividend yield in the portfolio? and Deutsche Post; the insurance and financial sector, formed by Ally Financial and Axa, that of the utilities, with Enel and Engie; the infrastructure and real estate, formed by Eiffage and Taylor Wimpey, the raw materials with ArcelorMittal ?? which offers the highest discount ?? and Glencore; and aerospace, which includes Leonardo and Airbus.
With only one member per sector, Deutsche Telekom remains for the part of telecommunications and the chemist, with Nutrien as representative.
Europe continues to gain weight
By geography, the Old Continent continues to gain weight in the portfolio with 18 listed (two more compared to the previous semester, after the inclusion of Faurecia and Rexe) ?? compared to the 7 firms with a US passport. These two incorporations together with AXA, Total Energies, Airbus, Sanofi, Eiffage and Engie make France the most represented geography in Europe. They are followed, with a tie of three representatives, the United Kingdom, Germany and Italy.
By contrast, exposure to Japan has been cut in half. With the departures of Takeda and Nintendo, Hitachi and Murata remain as the only representatives. Also, the portfolio has limited exposure to South Korea, through Samsung only.
Facebook
Twitter
Linkedin