Change your style or broaden your perspectives?
I've been scratching my head slightly at some of the choices people are considering here.
The theme as been ... it's hard to find value so ...
1) I'm going to modify my investment criteria
2) Move to cash (not a bad option of course. I'm currently 14% cash)
Nobody seems to be considering broadening the pool of stocks they pick from and given that Stockopedia has a European version I'm surprised. In fact there is no european stock discussion apart from Ben's articles.
However, I've found I don't have to modify my criteria to uncover high quality European stocks with value or growth potential. In selecting them I might ask for a slighty better risk return profile to cover increased costs, e.g. I have to telephone trade for some smaller european stocks.
Here are some examples that might tickle your fancy ... and remember the significance of the Stockopedia ranking increases in the European version as it considers 7000+ stocks.
MGI Coutier SA (EPA:MGIC)
MGI Coutier SA is a France-based company specializing in design, manufacturing, and marketing of automotive equipment. The Company’s activities are based on two main production lines: Fluid Transfer and Mechanisms. Fluid Transfer sector provides services in storage, treatment and diffusion of fluids and products include manifolds, ducts, air filters, cam covers, blow-by heating connectors and pipes, ventilation of battery compartment, cooling systems, fuel vapour pipe, dosing pumps, protective casings for additive systems and heated pipes for selective catalytic reduction systems, among others. Mechanisms sector manufactures opening, closing and articulation products such as doorstops and hinges, pedal boxes and under-bonnet mechanisms, locks & strikers and door handles and fuel caps, among others. The Company also has other divisions: Expertise, Research & Development, Environment and Aftermarket.
MGI Coutier SA (EPA:MGIC) passes 11 Guru screens and as a Stock Rank of 99. 
It as a strong history of growing revenue, profits and EPS. 
It does have some debt but it doesn't appear excessive.
I'm currently sat on a 28% gain with this selection.
BAKKAFROST (BAKKA)
Bakkafrost P/F is a Faroe Islands-based fish farming company. Its main business area is aquaculture and it consists of three segments: fish farming; value added products (VAP), and production and sale of fish meal, fish oil and fish feed. It is engaged in all production steps of sea farming, from salmon roe to harvested fish. The salmon is partly sold for salmon products and exported to foreign seafood processing companies. In addition, it operates VAP processing facilities, in which the fresh salmon is used as raw material for production of value added salmon. Through its subsidiary, Havsbrun, it produces fish oil, fish meal, fish feed and smolt. The Company operates licenses on 19 farming sites, located in 18 different fjords. The Company primarily sells its products on the European market, as well as in the United States. As of December 31, 2011, it had 18 wholly owned subsidiaries, such as P/f Bakkafrost Farming, P/f Bakkafrost Processing and P/f Bakkafrost Sales, among others.
BAKKA has a Stock Rank of 98 and passes 4 Guru screens, plus it has a good history of growing revenue, profits and EPS. I'm currently sat on a 5% gain with this selection.
£OSL:AWDR
Awilco Drilling PLC is a United Kingdom-based drilling contractor. The Company’s principal business is to own offshore drilling rigs for use in offshore drilling for oil and gas, and to provide drilling services for oil and gas companies using these rigs. The Company operates two semi-submersible drilling rigs: WilHunter, previously Arctic IV and WilPhoenix, previously Arctic II. As of December 31, 2011, the Company wholly owned five subsidiaries, namely WilPhoenix (UK) Ltd, WilHunter (UK) Ltd, WilPhoenix (Malta) Ltd, WilHunter (Malta) Ltd and the Singapore-based Awilco Drilling Pte Ltd. As of December 31, 2011, Awilco Drilling AS was the Company's largest shareholder and controlled 49% shares.
Awilco Drilling (OSL:AWDR) is a cheap high quality UK based stock that passes 2 Guru screens. I'm currently sat on a 5% gain with this selection.
Cegid SA (CGD)
Cegid Group SA is a France-based developer of business management software packages. The Company offers solutions and services to certified public accountants, retail businesses and the industrial sector, as well as the fashion, hospitality, services, trade, construction and transport industries. Its products include generic business software, business-specific solutions, finance and accounting solutions, payroll/human resources management solutions, business management solutions, business intelligence solutions, small business solutions and e-commerce solutions. The Company also offers additional services, including systems and networks, hardware, financing, partnership solutions, office supplies and consumables, hotline and technical support, and user portals. The Company operates through several subsidiaries including, among others, Cegid SA, Quadratus SA, GVI Holding SAS and Civitas SA.
Another high quality stock with a Stock Rank of 98 and a Vaue Rank of 91. I'm currently sat on a 10% gain with this selection.
Previously I've also picked up ...
Let's Gowex (GOW)
Let's Gowex SA is a Spain-based company engaged in the telecommunications sector. The Company’s main activities comprise the commercial transactions of Internet broadband with other telecommunication operators, the provision of information storage services and the offering of wireless Internet access in urban streets and transportation. The Company operates domestically and worldwide in such cities as Buenos Aires, Panama City, Bordeaux and Langreo. As of December 31, 2011, the Company owned such fully consolidated subsidiaries as Iber Wifimas SLU, Wifiactiva SLU, Gowex Wireless SLU and Gowex Caceres SLU, and Cash Devices SL was its major shareholder with 30.29% of its interest. In July 2013, the Company acquired Ideup.
I screened this fantastic growth stock last year. It has a very strong history of growing revenue, profits and EPS. I currently have a 126% gain on this selection.
Implenia AG (IMPN)
Implenia AG is a Switzerland-based holding company engaged in the engineering and construction industries. The Company diversifies its activities into three main segments: Real Estates; Infrastructure Construction and Industrial Construction. The Real Estate business segment focuses on General Contracting, project development, as well as covers all stages of the real estate lifecycle, from the planning and construction to operational optimization. The Infrastructure Construction business segment offers all the production activities required for road building, civil works, building construction, infrastructure projects and civil engineering, among others. The Industrial Construction business segment is diversified into tunneling, which is primarily engaged in realization of complex construction projects in Switzerland and abroad, and Prime Buildings International, which includes planning, project management and consulting for projects in the prime building sector abroad.
15% gain.
GFT Technologies AG (GFT)
GFT Technologies AG (GFT AG) is a Germany-based parent company of the GFT Group, an international supplier of information technology (IT) solutions. The Company divides its activities into two divisions: Services and Resourcing. The Services business division is engaged in the design, delivery and maintenance of customized Information Technology solutions. This segment also designs business models to optimize and mobilize banking processes for the financial sector. The Company's Resourcing business division is engaged in the provision of sourcing IT specialists for companies in various sectors. In addition, the Resources business division also manages external Information Technology service providers for its clients. The Company's subsidiaries are present in Brazil, Germany, France, the United Kingdom, Spain, Switzerland and the United States.
Passess 5 Guru screens, Stock Rank of 93 with an 8% gain.
SALMAR (SALM)
Salmar ASA is a Norway-based company active in the fish farming and processing sector. The Company is primarily engaged in the production of farmed salmon. The Company, along with its subsidiaries, is organized into two business segments: Fish Farming and Sales & Processing. The Fish Farming segment is divided into three regions: fish farming in central Norway (SalMar Central Norway), which holds 44 production licenses; fish farming in northern Norway (SalMar Northern Norway), which holds 23 licenses for the production of farmed salmon, and fish farming elsewhere (Rauma Segment), which owns and operates 14 marine-phase production licenses. The Sales & Processing segment sells the entire Company’s volume of harvested fish. The Company produces fry and smolt at six separate facilities. The Company’s subsidiaries include Salmar Settefisk AS, Salmar Farming AS, Salmar Nord AS and Salmar Processing AS, among others. On December 12, 2013, the Company sold its entire stake in Bakkafrost P/F.
1% gain
Spectrum ASA (SPU)
Spectrum ASA is a Norway-based company, which provides seismic data and seismic imaging services to the global oil and gas industry. It operates within two divisions, namely Multi-Client services and Seismic Imaging. The Company’s library of Multi-Client data specializes in regional coverage and includes projects from oil producing regions of the world. The Seismic Imaging offers data processing services, such as time imaging, velocity analysis, depth imaging and model building, among others. The Company is organized into four regions: North and South America, North West Europe and Africa, Mediterranean and Middle East, and Asia Pacific. As of December 31, 2011, the Company wholly owned six subsidiaries, such as Spectrum Geo Ltd, Spectrum Geo Inc and Spectrum Geo Pte Ltd, among others, as well as had two dormant joint ventures. In March 2013, the Company acquired Carmot Seismic AS and Carmot Processing AS.
I purchased this stock initially last year for its value based on future revenue growth, however concerns over conflict in the Middle East and more general concerns over the oil and gas industry brought about a 30% loss, however Reuters reported this week that
The seismic explorer reported better than expected preliminary sales for the fourth quarter on Wednesday, saying it had not experienced any of the market weakness that has plagued its peers
The market liked the news and it seems that the stock might have bottomed so I bought again on the break above 39/40 NOK mark. I'm currently sat on a 16% loss.
Cellavision AB (CEVI)
CellaVision AB is a Sweden-based company active in the medical technology sector. The Company develops and sells digital solutions for medical microscopy, as well as products enabling blood cell analysis and morphology diagnosis. CellaVision AB’s product portfolio consists of analyzers for automated medical microscopy analysis and software applications designed for remote access, competency testing and education. The analyzers include such brands as CellaVision DM96 and CellaVision DM1200, whereas the software applications are divided into CellaVision Body Fluid Application, CellaVision Remote Review Software and CellaVision Competency Software, among others. As of December 31, 2011, the Company operated four subsidiaries, based in Sweden, Canada, the United States and Japan.
Bought for growth potential. Low PEG, high quality, increasing forecasts plus good price momentum. I'm currently sat on a 13% gain.
Nolato AB (NOLA B)
Nolato AB is a Sweden-based company engaged in the development, manufacture and marketing of polymer product systems and components. The Company’s operations are divided into three operating segments. Nolato Medical offers development and production of components and products in polymer materials for medical technology and pharmaceutical customers. Nolato Telecom offers design, development and production of components and subsystems for mobile phone. Nolato Industrial offers development and production of components and products in polymer materials for customers in the automotive industry, white goods, gardening/forestry, hygiene, furniture and others. The Company operates a number of subsidiaries in such countries as Sweden, the United States, Hungary, China, the United Kingdom and Romania. In November 2013, it divested Nolato Sunne AB.
Stock Rank of 99 and passes 5 Guru Strategies. Cash in the bank and good cash generation. I'm currently sat on a 8% gain
I'm not tipping these stocks rather I'm trying to highlight some examples of the opportunities out there. Comments welcome.
Good luck
Phil
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19 comments
High quality no doubt, strong cashflow generation too.
Not enough volume for me though ... seems to illiquid for me.
Thanks
Phil
Hi Phil,
you wrote in your comment about a Spanish telecommunication company Let's Gowex SA (MCE:GOW). Let me point your attention to a Swedish telecommunication company Bahnhof Publ AB (STO: BAHN B). Look at its steady revenue and EPS growth over the past 7 years! It is not surprising that the stock price has increased by a factor of 10 since 2009 and keep growing. (The company passes 4 Stockopedia screens). The company has its business niche and a competitive advantage in providing secure communication (it hosted, for example, Wikileaks).
but dont take my word for it ...
Some of the best performing Guru Strategies are Kirkpatrick Value & Bill Miller Contrarian Value. They dont tend to generate a lot of stocks. The UK version Kirkpatrick Value currently has 2 stocks whilst the Euro version has 5 stocks. The Miller UK version has 0 stocks whilst the Euro version has 8 stocks.
Given the performance of those strategies one might argue that there's a good likelihood of a strong performance of the current selections and given the historic returns you might be prepared to accept a 2% FX hit, increased dealing costs and some tax on your dividends.
Each to their own
Best of luck
Phil
Hi inuitive6191,
From my admitted limited knowledge 'withholding tax' is only applicable to dividends. Surely only a major issue if your strategy is dividend focused?
Also 1% FX rate on a buy and 1% on a sell is hardly a major headwind ... surely spreads on small cap UK stocks are more of a headwind .
With respect to trusts and funds ... I think I can do a better job and I'd rather pay increased dealing costs than management fees.
I dont want to give money away but my point still is there are better options in Europe but you may have to pay a little more.
A significant barrier to holding European stocks directly in nominee accounts.
For instance, Ferrexpo's head office is in Switzerland and good luck to anyone who has tried to reclaim Swiss witholding tax when held in a nominee account. It's easier to go 15 rounds with Mike Tyson.
As mpat89 rightly points out, the currency charges are also a major headwind. Once all this is taken into account you have to be quite sure that your European stock is going to out perfrom your UK stock by a fair margin. I would usually search out an investment trust for overseas markets. A cost effective way of getting exposure with also the possibility of further gains through the narrowing of any discount.
Also be aware YouInvest's (formerly Sippdeal) FX rate is 1%
Just found some interesting articles on 'withholding tax' ...
http://the-international-investor.com/investment-faq/paying-uk-tax-foreign-shares
http://the-international-investor.com/investment-faq/reclaiming-withholding-tax-foreign-dividends
http://the-international-investor.com/investment-faq/holding-foreign-stocks-isa-sipp
Just to say that all of my investments are held within a SIPP and ISA's (wife's too)
My understanding is that the 'withholding tax' is applied to dividends. So given I hold my investments inside tax efficient wrappers all that's required is for me to contact my broker to ask if they take care of this.
Re withholding tax, you may be a bit optimistic.
UK law doesn't apply outside the UK, so the UK tax status is often irrelevant, e.g. in an ISA you would pay withholding tax the same as in a dealing account. Your broker is not involved, they will typically receive the net after withholding at source in the listing country.
SIPPs can help if the double-taxation treaty includes mutual recognition of SIPP-style pension schemes. The US does, and good UK brokers do the paperwork for you so that you get tax free US dividends. I've not heard of it being done for any other countries, so you're usually on your own having to contact the local tax authorities in the listing country to get a refund (which can be done, but I expect it to be cumbersome, I don't bother myself at the moment). Do let us know if you find a broker that does it for you for a country other than the US, it would be good news!
I certainly agree that Hexagon Composites ASA is an interesting growth company and I would rate it as a "strong buy.
I would like to be invested in foreign shares but there are a few issues:
- I am uncertain about withholding tax and believe that over the long term, such deductions would make a considerable difference yet would not be worth my time to reclaim individually.
- Foreign exchange risk
- My ISA provider says that FX balances cannot be held and so each transaction must be converted to/from GBP with a 2% markup, 2% being extremely large when you think it's 4% extra just to go in and out of a foreign share.
Any advice? Do we think that in general, the top 10% (by Stock Rank) of European shares will outperform the top 10% of UK shares? I was pondering using a non-ISA account to maintain a portfolio of US stocks one the feature becomes available since I imagine the Universe will be fairly large.
Hi mpat89,
Thanks for your comments.
I'm not sure what the term 'withholding tax' means in this context. It is true that different regions might well have taxes involved. With respect to long term impact on a portfolio then that only holds if you can find UK stocks that perform as well as the Euro stocks and that's the point ... Posters here are noticing a lack of UK opportunities and so they appear to be moving to cash or tweaking their investment style.
With respect to foreign exchange risk & Top 10 Stock Rank Euro vs Top 10 Stock Rank UK ... it's clear we think in a slightly different way. Personally I'd never buy the top 10 of either unless they met my other criteria. So when selecting stocks to buy I look for the potential first and the costs are secondary.
An example for me was Let's Gowex SA (MCE:GOW) where I'm currently sat on a 168% gain ... the increased dealing costs & FX costs become irrelevant. Perhaps I've been more aggressive in this bull market than I would have been in a less favourable climate. I've also tried to select what I consider to be solid markets, e.g. Norway, Sweden, Germany. Some argue that France has it's risks and obviously Spain is an ongoing concern but Let's Gowex SA (MCE:GOW) was such a great opportunity for me it was worth the risk and I've top sliced my original stake so it's a free ride from here.
I'm by no means an expert, in fact far from it, perhaps I'm being naive. Time will tell.
I hope others will chip in with their comments and observations.
Hexagon Composites ASA (OSL:HEX) looks like an interesing Norwegian growth opportunity.
Looks like a potenial step change in revenue and profits.
Forecasts are ramping up ... particularly for 2014 where there as been a 28% increase in the last 3 months.
Q3 interims in October were strong :
For full details see here
The bits that stand out (bolded in text above) is the apparent selection of CNG tanks as the preferred option in NA where Hexagon Composites ASA (OSL:HEX) are the market leader.
It doesn't scream cheap though ... fwd PE of 22, PEG of 0.95
I suppose it's dependent on the size of the North American market and whether other regions follow that pattern.
I'd appreciate any thoughts.
Cheers
Phil
I was thinking about Cellavision too but at the end I chose Vitrolife because of the consistent growth of both EPS and revenues
Yes, about 30 nordic stocks.
Vitrolife AB (STO:VITR) would have failed two criteria on my Growth screen as I look for:
- 3m Average Volume > 40000 (trying to avoid illiquid stocks)
- PEG < 1 (I'm looking for cheap growth stocks)
Are there other Euro stocks that you hold?
Nordic stocks: BAKKA, AWDR, SALM, SPU, NOLA. I recently bought VITR which is a kind of similar to your CEVI.
It was interesting to read your comment as I own 5 out of 11 stocks that you commented on.
Fantastic igozo13!
Which ones do you own?