Author: Tristan d'Aboville

Tristan d’Aboville is an Executive Director, Research Analyst, managing the European Research Product. Mr. d’Aboville has more than 16 years of experience in equity research and sales. Since joining the firm in 2012, he has applied his client-centric style with analysts and portfolio managers, anticipating and exceeding their needs. He writes the well-received weekly European commentary, and follows it with a client conference call to discuss findings. Prior to William O’Neil + Co., Mr. d’Aboville was a top-producing salesperson at Kepler Capital Markets, formerly known as Julius Baer, and at Natixis Bleichroeder, covering European equities for large U.S. institutional clients. He started his career as an equity analyst at Aurel-BGC, later moving to Natixis Bleichroeder, where he became the lead analyst for the European Hotels, Leisure and Catering Sector. He was recognized as a Top Analyst for Predictability & Recommendations by AQ Publications in 2003. Extel named him one of the top three European analysts covering the business services and hotel & leisure industries. Prior to the securities industry, Mr. D’Aboville was an auditor with Arthur Anderson. Mr. d’Aboville earned a Master of Science in Managerial and Financial Economics from ISC Paris School of Management. Later, he studied Global Affairs at New York University. He is a Certified International Investment Analyst (CIIA). A sportif, Mr. d’Aboville enjoys kite surfing, sailing, skiing, tennis, chess, and spending as much of his free time as possible with his wife, young daughter, and son.

European Luxury Sector

Posted on by Tristan d'Aboville

Key points:

 

  • Kering ( KER.FR ) is the first large luxury company to provide indications about the impact of COVID-19 on its business. We model revenue and operating profit declines of 18% and 27%, respectively, in FY20.
  • We maintain a cautious view on the recent market rebound and, within the European luxury sector, we recommend holding the best defensive name: LVMH ( LVMH.FR ).
  • Although we are forecasting a low double-digit revenue decline in 2020 and a 24% decline in operating profit, LVMH’s long-term growth story is still appealing: 1) LVMH rates among the best European luxury players though our lens; 2) it offers one of the best defensive profiles among peers, thanks to its leadership position and brand recognition; and 3) the integration of Tiffany (TIF) adds an attractive long-term growth story.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • The Stoxx 600 along with all European markets remains in a Downtrend. Since the index was able to remain above its Monday’s low, we are now looking for a follow-through day to move the market back to a Confirmed Uptrend.
  • However, we remain cautious: historically, when the market falls into bear market, the first follow-through day tends to fail half of the time.
  • In this report, we provide the list of stocks that offer the best defensive profile based on our fundamental and technical ratings.
  • Case study: Jeronimo Martins ( JMT.PT ) – a unique mix of both defensive and growth characteristics. Galenica Sante ( GFALE.CH ) – Defensive play with leading positions in an attractive sector.

European Equities Strategy

Posted on by Tristan d'Aboville

European markets lost more than 20% in less than two weeks, an exceptional move that has occurred only three times since 1987. The markets have fallen into bear territory which, based on historical precedent, suggests 10% further downside from current levels. Although at first glance valuation now seems attractive, we believe that further earnings cuts are likely given that markets do not yet fully reflect the impact of the coronavirus outbreak on the economy and corporate earnings. In this environment, we want to closely adhere to our time-tested methodology. European equity markets continue to be in a Downtrend, so we do not encourage clients to commit any new capital to European stocks until we see a strong follow-through day.

 

In the attached report and accompanying webinar, Executive Director, Research Analyst Tristan d’Aboville and Equity Research Analyst Ruhell Amin provide detailed screens using the O’Neil flagship equity research platform PANARAY® to assess the best stocks based on two scenarios. The first scenario assumes further downside risk and a gradual recovery, which suggests focusing on defensive names with above average fundamental characteristics. The second scenario suggests focusing on washed-out former leaders that may bounce back rapidly in a V-shaped recovery. They will also present an update of the European Focus List, which continues to create alpha versus its benchmark despite the poor market environment.

 

You can listen to the accompanying webinar in the Research Library on PANARAY® or on our website any time after 11am ET on Thursday, March 12.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

The iShares Dj Stoxx 600 (EXSA.DE) was moved to a Downtrend this week after it breached its 50- and  100-DMA. The next support is at 39.17 (5% downside), which coincides with the October 2019 breakout  to new highs and the current level of the 200-DMA.

Don’t buy the dip but look for a follow-through day: Until that day occurs, we recommend a defensive  posture, reducing risk in ideas breaking key levels of support, and avoiding new buys until conditions stabilize.

Trim the weakest positions showing massive distribution: from our European Focus List, we removed  Safran (SGM.FR), Airbus (AIRS.FR) and Vitrolife (VITR.SE).

Holding stocks in this weak market. We recommend focusing on stocks that are holding up the best, not  too extended, and displaying top fundamental metrics. Best names to focus on: Jeronimo Martins  (JMT.PT) in food retail, and Wolters Kluwer (WSG.NL) in media.

Conviction Laggards update: Last week, Glencore (GLEN.GB) was added to our Conviction Laggards list,  joining Seb (SEB.FR), Sodexo (SDX.FR), and Bankinter (BKT.ES).

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

 

 

  • A majority of European Markets remain in a Confirmed Uptrend. The average number of Distribution days is still low. Having said that, we continue to see the market as extended and can’t rule out a short term pullback given the uncertainties surrounding the impact of coronavirus on the global economy.

 

  • Sector rotation: short-term momentum among Financials has accelerated, largely reflected in the long list of stocks breaking out of early-stage bases. We still underweight the sector on our Focus List as we do not see the sector emerging as a new leader, given the low interest environment.

 

  • We have not made any change on our Focus List this week. Actionable ideas on the Focus List include Edenred ( EDEN.FR ), Stroeer ( SAXX.DE ), Homeserve ( HSV.GB ), Halma ( HLMA.GB ), Basic Fit ( BFIT.NL ), Ferrari ( RACE.IT ), Trainline ( TRN.GB ), London Stock Exchange ( LSE.GB ), and Infrastructure Wireless Italiane ( INW.IT ).

 

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

  • The majority of European indices remain in a Confirmed Uptrend. Although we maintain a positive view on the general market, we can’t rule out a short-term pullback, should history repeat itself. We recommend being selective in increasing  risk and that too in early-stage quality ideas emerging from proper bases.

 

  • Technology, Construction & Material, and Financial Services are among the most extended sectors in Europe. In this report, we provide a list of stocks in which we recommend taking a profit / trimming position.

 

 

  • Conviction laggards: we removed Swedbank ( SWED.SE ) from the list.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

 

  • The iShares Dj Stoxx 600 ( EXSA.DE ) was moved to an Uptrend Under Pressure after it accumulated new distributions. Eleven out of the 16 developed European markets are in an Uptrend Under pressure. The U.K., Luxembourg and Austria are in a Downtrend.
  • Denmark ( 0DKKFXIN ) remains the most constructive index among the key European indices. Top picks: Coloplast ( COL.DK ) and Orsted ( DEN.DK )
  • Sector rotation: Transportation and Cyclical continue to lose momentum, while risk-averse sectors such as Staple, Health Care, and Utility trend upwards.
  • European Focus List update: with 51 names, the list is up 2.69% year-to-date and, as of last Friday, was outperforming its benchmark by 445bps.
  • Actionable ideas include: Edenred ( EDEN.FR ), Basic-Fit ( BFIT.NL ), JD Sports ( JD.GB ), Ashtead ( AHT.GB ), LSE  ( LSE.GB ), Homeserves ( HSV.GB ), Euronext ( ENX.FR ) and Teleperformance ( ROFR.FR ).
  • Last week we added Ashtead Group ( AHT.GB ) to our List.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points from this week’s report:

Please refer to the attached PDF for the full report.

 

  • Market’s pullback was expected, but its magnitude remains unknown given the recent outbreak of coronavirus.
  • France ( 5 distribution days ), Germany ( 5DD ), the U.K. ( 4DD ), Ireland ( 6DD ), Italy ( 7DD ), Spain ( 5DD ), Belgium ( 5DD ) and the Netherlands ( 5DD ) breached their 50-DMA support yesterday on increasing distribution and thus were moved to an Uptrend Under Pressure.
  • There were no changes in our Focus List last week. Actionable Focus List names with RS line reaching new High include: Cellnex ( CLNX.ES ), Euronext ( ENX.FR ), and Teleperformance ( ROFR.FR ).
  • In this report, we offer a list of stocks among defensive Staple, Health Care, Telecom, Real Estate, and Utility that – we believe – are likely to outperform, should the market pullback accelerate on concerns over China’s coronavirus.

European Weekly Summary

Posted on by Tristan d'Aboville
Rotation toward defensive is expected
  • In what can be seen as an early sign of investor caution, the defensives, Utility and Consumer Staple sectors, led the run last week. On the other hand, despite an array of good results by their American counterparts, Financial has been lagging the market. Other laggards were Energy and Transportation stocks. Refer to the European market heat map, page 4.
  • There are clear dominant reasons for defensive stocks to lead in the short term: 1/ The market overall is extended from its long-term moving averages and is most likely to consolidate. The Stoxx 600, trading near all-time highs, is 8% away from its 200-DMA. Historical precedents (such as April and May 2017) suggest that the market is likely to experience a pullback soon. 2/ The early enthusiasm of the new year and trade resolution was quickly overshadowed by weak macroeconomic indicators, in addition to new tensions. The investors now seem wary of the high volatility. Refer to the iShares Dj Stoxx 600 weekly Datagraph™, Page 7.
  • In terms of our methodology, out of the 17 indices we cover, 14 are still in a Confirmed Uptrend, and two (Austria and Luxembourg) are in an Uptrend Under Pressure. Portugal is the lone market remaining in a Rally Attempt. The distribution day count has also dropped to a low average of 2.5, with the expiration of two distribution days over the week. Refer to the European market conditions, page 5.
  • Although we continue to see the overall action as very constructive, we do not rule out a short-term pullback in sectors/stocks extended from their ideal entry point and rotation toward defensive sectors that have been lagging over the last 26 weeks (e.g. Staple). Thus, we recommend being invested and adding new positions only in names that are clearing the early-stage base. As the number of breakouts in the region remaining elevated, there is still a long shopping list. Refer to sector cards from Page 10 to 20.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points:
The Stoxx 600 remains in a Confirmed Uptrend with four distribution days, but is extended, suggesting that we are due for a pullback.

With leaderships having remerged among growth sectors, we do recommend being
invested but avoiding extended sectors/names such as the ones in technology.

Health Care offers a long list of stocks breaking out of new bases. From our Focus List, Sartorius (SRT3X.DE) is actionable.

We added Adyen last week. Our list is now made of 44 stocks. Actionable ideas include: Solaria (SEM.ES), Basic‐Fit (BFIT.NL), Adyen (ADYE.NL), JD Sports (JD.GB), Worldline (WLN.FR), Homeserve (HSV.GB), Teleperformance (ROFR.FR), GVC Holding (GVC.GB), and Sartorius (SRT3X.DE).