Tata Consumer Products

Key points from this report:

 

  • Buy. We reiterate our buy recommendation on TCPL after the stock broke out of a stage-two consolidation on strong volume. In spite of recent weakness in Indian markets, it has held onto its 21-DMA, indicating strength.
  • TCPL has one of the fastest growing profiles among Indian Staple stocks, reflected by top-notch fundamental O’Neil Ratings (EPS Rank of 87 and SMR Rating of A). Trends toward premiumization and synergies from the acquisition of Tata Chemicals’ Food Portfolio will continue to generate strong bottom-line growth, with consensus expecting >20% EPS CAGR in the next three years.

 

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 remains in a Confirmed Uptrend with three distribution days and continues to move higher, making record highs.
  • Of the 17 indices that we cover, 15 are in a Confirmed Uptrend and two in an Uptrend Under Pressure. The distribution day count remains low, with the average distribution at 3.5 (compared to 4.1 last week). We remain constructive on the markets and are open to adding risk coming out of proper bases.
  • In connection with our recent works this past month (see recent Weekly Summary reports on Staple and Capital Equipment), we highlight sectors showing improving short-term momentum. This week, our focus is on health care – the worst performing sector over 26 weeks. Our rotation chart shows the first signs of short-term revival. Actionable ideas include Focus List names: Ambu (AMB.DK), Carl Zeiss (AFXX.DE), and GN Store (GSN.DK). Stocks of interest include Chemometec (CHM.DK) and Bachem (BANB.CH).

Emami

Key points:

 

We reiterate our buy recommendation after the stock broke out of a stage-one cup base on decent volume and is trading constructively above its key moving averages. We believe the company’s healthcare portfolio will benefit immensely from the onset of the second wave of COVID-19. Over the long term, its increasing exposure to the modern trade and ecommerce distribution channels will be the key growth driver.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 remains in a Confirmed Uptrend with four distribution days. The Stoxx 600 was up 1.8% last week, completing six weeks of gains, its longest weekly winning streak since November 2019. Of the 17 indices that we cover, 13 are in a Confirmed Uptrend and four in an Uptrend Under Pressure. The U.K., Austria, and Belgium were shifted to a Confirmed Uptrend after they reclaimed their respective prior highs.
  • With more broad-based strength in the market, reflected in the overall increasing numbers of stocks breaking out of consolidation, we monitor sectors that are showing improving short-term momentum: this week, our focus is on Capital Equipment. Stocks of interest: Bravida Holding (BRAV.SE), Schneider Electric (QT@F.FR), and Legrand (LRRS.FR).

Relaxo Footwears

Key points from this report:

 

  • We reiterate our buy call on Relaxo as the stock broke out from a stage-two flat base on strong volume. It is trading at a 52-week high and support is at its 21-DMA (INR 897, +6% away).
  • Strong fundamental ratings: EPS Rank 79, which is likely to improve, with consensus estimating EPS growth of 22% y/y in FY22. Composite Rating 82 and SMR Rating B on the back of healthy operating cash flows and improving EBITDA margins (from 15.6% in FY18 to 17% in FY20).
  • Technical ratings have remained decent: RS Rating has improved slightly to 56, showing outperformance relative to the market. Strong Up/Down Volume ratio of 1.9 and A/D Rating of A- indicate buying interest.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 remains in a Confirmed Uptrend with five distribution days. The index is constructively trading along its short-term moving averages and recently closed above its February 2020 high.
  • Of the 17 indices that we cover, 12 are in a Confirmed Uptrend and five in an Uptrend Under Pressure. We shifted Austria and Belgium to a Confirmed Uptrend.
  • Since March 2020 lows, divergence between sector is at an extreme level. Thus, we are monitoring lagging staples names that are still trading far from their 52-weeks high but are showing short term technical improvement.
  • Over the past five days, we did not make any changes to our Focus List.

Nomad Foods

BUY: We reiterate our buy call on NOMD after the stock broke out of a stage-one consolidation following the acquisition of Fortenova’s frozen food business group (FFBG). Shares are trading constructively above their key moving averages and in a buy range above $27 resistance. We see a strong rational behind FFPG’s acquisition (geographic and product expansion within the attractive ice cream segment), which will be accretive to EPS in the first year. Nomad trades at a 2021 EV/Ebit of 14x, a discount versus its U.S. peers despite having above average fundamental O’Neil Ratings and Rankings.

European Weekly Summary

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 remains in a Confirmed Uptrend with five distribution days (compared with seven at the start of the week) as two expired this week. Of the 17 indices that we cover, nine are in a Confirmed Uptrend and eight in an Uptrend Under Pressure. Switzerland was upgraded to a Confirmed Uptrend while Spain, Norway, Austria, and Belgium were downgraded to an Uptrend Under Pressure.