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Europe Stock Writeups |
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Shares in Bacou Dalloz were sold as they approached fair value. The slowdown in Spanish and US construction has the potential to impact the company's sales of protective clothing, and with no other discernible catalysts on the horizon, there was little point in holding on to the stock for longer. Bacou Dalloz is a world-leader in the design and manufacture of personal protective gear for the workplace. It is the only company in the world to combine all the different personal protection products under one roof - the simplification of only receiving one invoice is a great reason for distributors to work with it. The market is a steady one and also cash-generative.
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A mid-sized Dutch housing development company. Low debt and large, cheap land bank - both attractive supports to the business. The Dutch housing market has yet to show signs of the downturn so visible in the UK, Ireland and Spain, but affordability there is not particularly good, mortgage credit is starting to dry up and the expectation is for a squeeze on both margins and volume in the second half of this year. Most important is the distinct lack of visibility over earnings and the level of information provided by management, hence the sale. Ballast Nedam is a Dutch construction company. Ballast has been restructuring, reducing its workforce by 50% and divesting of non-core, international operations, where the company lacked the scale to generate sufficient returns. The strategy to refocus on the core Netherlands market, and offer consulting services as well as pure construction, comes at a time when government initiatives (PFI in the public sector and cutting red tape in the housing sector) should help sustain the new momentum in the hitherto moribund Dutch market. Thus incremental revenue increases allied to a restructured cost base should boost returns.
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Bayer. The merger with Schering has given a welcome boost to Bayer's pharmaceutical portfolio from new product launches at a time when the major players are facing holes in their drug pipelines. At the same time profitability is rising as cost savings are reaped. The company also benefits from a reasonably good crop science business, which until recently has been ignored by analysts and which should see a big pick-up in earnings as a result of the improving outlook for farmers.
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One of France's leading software & management systems companies, with a highly volatile and occasionally chequered history. However, new management, the reduction of glitches in its programmes, and a recently announced tie-up with Adobe make the earnings visibility significantly clearer.
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