While Europe is baking in a heatwave, millions of investors have taken to the beaches. This always sucks liquidity out of the market, creating more volatility. France’s CAC 40 index is currently probing value levels we saw over a year ago, since Europe was still bedevilled with periodic COVID lockdowns. This is starting to create some possible entry points for value players.
We crunched the numbers and came up with some interesting value propositions. Our thanks also to Deshe Analytics for access to their excellent AI-driven data covering global stocks. All stocks listed here are rated a strong buy and have a value rating at 89% or higher from Deshe Analytics.
Nextedia (ALNXT)
Nextedia provides digital marketing services in France. It offers cybersecurity, cloud and digital workspace, and customer experience solutions. The company was formerly known as Social Mix Media Group and changed its name to Nextedia in July 2013. Its PE ratio is still a little high, at 20x, but it stacks up well in terms of cash flow and balance sheet against competitors in the French IT sector. It even beats the likes of SQLI on cash flow. The company confirmed last month it was acquiring cybersecurity specialist Manika, and is patently in growth mode. One to watch.
Carrefour (CA)
Carrefour is well known to international investors, being a multinational French group and a dominant player in global supermarkets. But it is looking cheap right now and this summer might be the time to pick up a few shares. As a big French stock Carrefour has followed the CAC downwards in 1H of this year. Metrics are supportive of a buy at under EUR 17 where it was trading at time of writing (PE ratio down at 12.2x at time of writing). Growth, value, and income factors indicate a well-executed and balanced strategy, which is generating exciting growth. This relative strength should allow Carrefour to continue to perform well even in a tough market.
Groupe LDLC (ALLDL)
This is another undervalued French IT stock. Groupe LDLC operates as an online IT and high-tech equipment retailer. It operates 15 retail brands and seven e-commerce websites, as well as a chain of brand stores and franchises. Sales and net income were down in their last report which might explain some of the loss of enthusiasm among investors. The company announced a share buyback in March 2022. Shares have been treading water this year, having plunged from around the EUR 66 level a year ago. This is starting to look like an acquisition target for another tech company at this price, as many of the financials still look solid.
Baikowski (ALBKK)
Baikowski, together with its subsidiaries, designs, develops, produces, and sells ultra-pure alumina powders and formulations. The company also produces mineral oxides and composites, such as zirconia, and spinel, as well as YAG, ZTA, and ceria for technical ceramics, precision polishing, crystals, additives, and coatings applications. It is an old school industrial chemicals and materials play, having been founded in France in 1904. For the full year, the company reported sales of EUR 44.85 million compared to EUR 35.57 million a year ago. Net income was EUR 6.78 million compared to EUR 1.28 million a year ago. Basic earnings per share from continuing operations was EUR 1.85 compared to EUR 0.35, which is not to be sniffed at. The sell off in June has set up the current value opportunity, with shares still trading higher than they were in mid-April, and you’re looking at strong momentum over the 24 month time frame.
Cast (CAS)
Our final French value prospect is Cast, another tech stock with a market cap of slightly over EUR 160m. Cast recently announced the expansion of its ecosystem to help organisations migrating complex custom-built software to cloud. These business-critical applications are mostly designed for very different environments and need to be modernised when moving to cloud. The new venture, CAST Highlight, can analyse hundreds of applications in a week to pinpoint what needs to change in the source code, the effort required, the best-suited cloud native services to use, and the best migration path to take. Cast shares are up at over EUR 7 now and investors who held stock in March would have doubled their money already. The PE ratio IS high, mind you, but the other metrics still support this as a value bid.