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 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.

I – Stoxx 600 moved to an Uptrend Under Pressure
  • Yesterday we moved the Stoxx 600 to an Uptrend Under Pressure after the index breached its 21-DMA on a clustering of distribution days the past two weeks. Total distribution days now stand at six. Given the pressure, don’t chase extended names, but look for stocks that are breaking out of early-stage consolidation. 
  • While most European markets remain in a Confirmed Uptrend (12 of 18 indices, including the Stoxx 600), the average number of distribution days increased again this week to 3.9 for the region (versus 3.10 last week and 1.10 two weeks ago). This week, along with the Stoxx 600, we moved Sweden and Finland to an Uptrend Under Pressure.
  • In terms of rotation among sectors, momentum in Health Care, Retail, and Financial has been improving over four weeks while still deteriorating in Capital Equipment (except for Aerospace & Defense), a trend we already highlighted last week.
  • In Health Care, European Focus List names Carl Zeiss Meditech ( AFXX.DE ) and Sartorius ( SRT3X.DE ) made upward moves this week after reporting strong earnings. Both are, however, too extended form a proper entry point, but keep positions as they continue to trade constructively along their rising moving averages. Outside the Focus List, actionable ideas include Grifols ( PROB.ES ), which broke out of a 56-week consolidation base this week. Its set to report Q2 earnings on July 31 and consensus expects 14% revenue growth along with strong margin expansion.
  • In Retail, short-term momentum has been improving significantly, led by M&A, e.g. the Grandvision ( GVNV.NL ) and Ei Group ( EIG.GB ) acquisitions. From our Focus List, Greggs ( GRG.GB ) continued its upward trajectory along its rising 10-WMA but shares are now too extended. Hold positions. Shares of Dunelm ( DNLM.GB ) are setting up well after finding support at their 100-DMA and are retaking their 21-DMA.
  • In Financial, insurance continues to be the most interesting group. In addition to the list (Ageas ( AGS.BE ), Generali ( G.IT ), Baloise ( BALN.CH ), Allianz ( ALVX.DE ), and Zurich Insurance ( ZURN.CH )) we provided last week, Helvetia ( HELN.CH ) is actionable after breaking out of a cup-with-handle.

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 iShares DJ Stoxx 600 is still in a Confirmed Uptrend, but the recent clustering of distribution days is concerning. The index has accumulated five distribution days within the past five weeks; three were added in the past five days. The index is now sitting at key 21-DMA support. For the uptrend from the June 18 follow-through day to remain constructive, we are looking for the index to bounce back from that level along with stock leadership to emerge, reflected by an increasing number of stocks breaking out of consolidation.

Most European countries are still in a Confirmed Uptrend (16 of 18 indices including the Stoxx 600), but the average number of distribution days has been increasing significantly in the past five days to an average of 3.1 for the region (versus 1.10 last week).

This week’s weakness is reflected by the very low number of stocks breaking out of consolidation and is a consequence of a sector rotation where Financials and Energy have led the market while short-term momentum among Capital Equipment (with the notable exception of the Aerospace and Defense group) has deteriorated.

European Weekly Summary

Posted on by Tristan d'Aboville

Key Points      

Action this week confirms our positive sentiment toward European equities  

We remain bullish on European equities. We will need to see a clustering of distribution and leadership fading to change our current positive outlook on the general market. Until this change of character occurs, continue buying high quality ideas at correct pivot points.

The iShares DJ Stoxx 600 is in a Confirmed Uptrend. Since the follow-through day on June 18, the index has been trading constructively, breaking short-term resistance at 38.85 and approaching long-term resistance at 39.76. Support at the 10- and 21-DMA continues to rise toward current prices. Distribution remains low, with two distribution days.

Among the 19 countries we cover in Europe (including the Stoxx 600), 17 are now in a Confirmed Uptrend. This week, we moved France, Denmark, and the Netherlands back to a Confirmed Uptrend from an Uptrend Under Pressure. Ireland recorded a follow-through day Monday and was moved to a Confirmed Uptrend as well. The average number of distribution days across region is at a low of 1.10.

The market continues to broaden, with multiple sectors participating in the rally. As of Thursday, Transportation, Consumer Cyclical, Staple, Financials, and Technology have risen 3% or more over the week. The number of stocks breaking out in Capital Equipment, Cyclical, and Financials has also risen significantly (see sector score cards for names).

Focus List update

In a such an environment, the number of ideas on our Focus List continues to rise. We have now 45 names on the list, an historically high number. This week, we added two new names: Inwit (INW.IT) and Stroeer (SAXX.DE). The list is now outperforming its benchmark by 830bps year-to-date. 

Other actionable ideas on our Focus List include: Airbus (AIRS.FR), ASML (ASML.NL), Dassault Systems (DSY.FR), ???????Elekta (ELKB.SE) and Puma (PUMX.DE):

European Weekly Summary

Posted on by Tristan d'Aboville

Key Points

  • The iShares DJ Stoxx 600 is in a Confirmed Uptrend with two distribution days. Although the market has experienced some selling pressure this week (Stoxx 600 down 1.02% w/w), the follow-though day on June 18 remains relevant.
    • The index has been able to remain above its June 3 low.
    • Volume has been quite muted with markets across the region avoiding a concentration of distribution days.
    • Leadership continues to trade constructively as reflected by the performance of the European Focus List (up 22.43% year-to-date versus 14.66% for the iShares DJ Stoxx 600), although the number of stocks breaking out of consolidation has dried in the past week.
  • The index is currently sitting at its 50-DMA but remains 1.3% above key 100-DMA support. We continue to recommend gradually adding exposure to European equities with a focus on stocks clearing an early stage of a consolidation base.
  • By sector, Capital Equipment, Cyclicals, and Staples continue to lead the market over 26 weeks. Technology’s short-term momentum has deteriorated.
  • Among leading sectors, Capital Equipment continues to offer a long list of actionable ideas. This week, Ashtead ( AHT.GB ), Kone ( KNEBV.FI ), Stroeer ( SAXX.DE ), and Spectris ( SXS.GB ) are clearing consolidations and are actionable.
  • Our European Focus List continues to offer great leadership names: the list is up 22.34% year-to-date, outperforming its benchmark by 800bps. This week, we added Elekta ( ELKB.SE ), a $5.25B market cap provider of equipment and software used for radiation therapy, to the list.
  • The list now has 41 names, up from 14 names at the beginning of the year. This increasing number of recommendations reflects our positive view on the market. As we have mentioned several times in the past, there is a clear correlation between the number of ideas on the list and the market’s performance.
  • Best action this week includes:
    • Orsted ( DEN.DK ), up 5.6% this week. Shares are trading 9% from pivot, slightly extended. Hold position.
    • Aveva Group ( AVV.GB ), up 2.9% this week. Shares are very extended. Do not chase but hold positions. RS line continues to trade in an uptrend and is at an all-time high.
    • Puma ( PUMX.DE ), up 2.5% this week. Shares broke out of a 38-day consolidation base and are actionable. 
  • Elekta ( ELKB.SE ) – New addition of the week. Elekta provides equipment and software used for radiation therapy and radiosurgery for the treatment of cancer and brain disorders. O’Neil Methodology: The stock is breaking out of a nine-month consolidation, turning actionable. Fundamental ratings: EPS Rank 40, SMR Rating B, Composite Rating 72. Technical ratings: Rising RS line, RS Rating 67, A/D Rating B-.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points:

  • Along with the U.K., Italy, Portugal, Spain, and Belgium, the Stoxx 600 was moved
    to a Confirmed Uptrend this week after recording a follow‐through day on June
    18.
  • With such positive action, we now recommend gradually adding more capital
    toward European equities, particularly in the Capital Equipment, Cyclical, and
    Health Care sectors.
  • New additions to the Focus List: Leonardo ( LDO.IT ) and Dunelm ( DNLM.GB )
  • Actionable ideas form the Focus List: THQ Nordic ( THQ.SE ), Edenred ( EDEN.FR ),
    Safran ( SGM.FR ) and Safran ( SGM.FR ):

European Weekly Summary

Posted on by Tristan d'Aboville

Key Points

The iShares DJ Stoxx 600 is in a Rally Attempt. We recommend, however, staying patient and waiting for a follow-through day before becoming more aggressive.

The recent trend has led us to upgrade several markets, but the majority is still attempting a rally .

Momentum in Capital Equipment has been rising this week. Stock of interest: Leonardo (LDO.IT).

The European Focus List (

) continues to generate relative outperformance in this environment. Best action this week: Soitec (SOI.FR),Halma (HLMA.GB), Nibe Industrier (NIBE.SE).

The most interesting story comes from the Software space, where Dassault Systemes (DSY.FR) announced the acquisition of MDSO.

Focus on the new addition of the week: Worldline (WLN.FR).

European Weekly Summary

Posted on by Tristan d'Aboville

Key Points

I – A Majority of Countries Attempt to Rally

The Stoxx 600 closed with a weekly gain of 2.33%, led by Cyclicals and Utilities. Real Estate was the only sector displaying negative return; weakness was particularly visible among German stocks ( Leg Immobilien, LEGX.DE; Vonovia, VNAX.DE; Tag Immobilien, TEGX.DE ) after Berlin authorities announced their intention to push a rent-freeze proposal through the legislative process. Like many country indices, including Italy, Belgium, the U.K., and Sweden, Germany was able to hold Monday’s low and, thus, was moved from a Downtrend to a Rally Attempt.

A majority of countries are now in a Rally Attempt. The FTSE 100 ( U.K. ) is now sitting at its 50-DMA, a key resistance level, after a 2.38% weekly gain. The DAX 30 ( Germany ) gained 2.72% this week and the index closed above its 50-DMA. The CAC 40 ( France ) was the leading index in the region with a weekly gain of more than 3%, but it remains in an Uptrend Under Pressure due to its high distribution day count of eight.

European Weekly Summary

Posted on by Tristan d'Aboville

Key points:

The iShares DJ Stoxx 600 was shifted to a Downtrend this week along with several other markets in the region.

We recommend avoiding initiating new positions in this environment.

For investors who need to be fully invested, we look at stocks with an RS line at new highs along with other defensive fundamental and technical characteristics.

From our Focus List, the best names include: Grieg Seafood ( GSF.NO ), Sartorius ( SRT3X.DE ), LVMH ( LVMH.FR ), Telecom Plus ( TEP.GB ), Kerry Group ( KRZ.IE ), Aak ( AAK.SE ), and Greggs ( GRG.GB ). 

European Weekly Summary

Posted on by Tristan d'Aboville

Key points:

We reiterate our cautious call on the market: the iShares DJ Stoxx 600 is still in an Uptrend Under Pressure with five distribution days.

Do not chase extended names and focus on defensive stocks, particularly among Staples and Health Care.

European Staples display indisputable technical and fundamental leadership characteristics. Top European Focus List picks include Davide Campari ( CPR.IT ), Kerry Group ( KRZ.IE ), and AAK ( AAK.SE ).

The European Focus List continues to outperform its benchmark, but do not chase extended names: Homeserve ( HSV.GB ), Sartorius ( SRT3X.DE ), Aveva ( AVV.GB ), Greggs ( GRG.GB ), Diageo ( DGE.GB ), London Stock Exchange ( LSE.GB ), Halma ( HLMA.GB ), NIbe ( NIBE.SE ), and Temenos ( TEMN.CH ).

Focus on defensive names that are clearing recent consolidation on rising RS line: Carl Zeiss Meditec ( AFXX.DE ), Davide Campari ( CPR.IT ), Kerry Group ( KRZ.IE ), Givaudan ( GIVN.CH ), SIKA ( SIKA.CH ), Gn Store ( GSN.DK ) and Safran ( SGM.FR ).

May 23, 2019 – Consumer Staple Themes Playing Well in the Long Term with Tristan d’Aboville

Posted on by Tristan d'Aboville

Momentum in the Consumer Staple sector has been rising across the globe on the back of increasing trade tensions and concerns about Europe’s economic growth. In the U.S. and Europe, leadership has been emerging, while in Asia, the picture is more mixed. In this webinar, Executive Director, Research Analyst Tristan d’Aboville will reveal the groups and stocks he thinks are likely to outperform, along with key themes he believes will play well in the long term.