Investors are rediscovering small stocks, often innovative and quality SMEs and midcaps. Focus on the favorite stocks of eight managers specializing in “stock picking” who are free from indices and will seek growth stocks in all areas.
Most SME managers are looking for quality stocks which still suffer from a lack of recognition, due to their small size.
Growth stocks that they will not surpass in a wide variety of sectors. After rushing to the small treasures of digital, technology and health as soon as the pandemic appeared, which has since flown away, such McPhy, Valneva… These managers have broadened their spectrum to find growth stocks at more reasonable prices.
Thus, the French IT services company Aubay was rediscovered by investors after the announcement of Pfizer’s vaccine results in November, and featured in the front lines of Sycomore Sélection PME, or CM-AM PME-ETI funds.
“It is a very well managed company with still reasonable valuation” affirms Emilie Da Silva, manager of Nova Europe ISR, at Eiffel Investment Group. She also appreciates Swedish Sword, also selected by Alban Préaubert, the manager of Sycomore Sélection PME.
Both acquired the precepts of socially responsible investment (SRI), they share the same interest for the specialist in dematerialization Thanks (new record year in 2020).
Telework is on the rise
The consulting sector is another winner of the digitalization of the economy. “Wavestone will still benefit from teleworking ”indicates Sébastien Lalevée, Managing Director of Financière Arbevel and co-manager of the Pluvalca Initiatives PME fund. Emilie Da Silva confirms. She appreciates the social management of the company, “the key to success in the consulting business”.
Home activities are on the rise. Evidenced by the successful introduction of studio Alchimie last November. “The company’s communications on its social and environmental responsibility were one of the elements of the success of the IPO, which was well rated by the extra-financial agency Gaia” underlines Sébastien Lalevée, manager of Pluvalca Initiatives PME and director from Financière Arbevel, which guaranteed the transaction.
Sycomore Sélection PME retains for its part the specialist in video games Bigben Interactive. CM-AM PME-ETI Actions appreciates the Swedish digital game publisher Stillfront and Sextant PME prefers Focus Home Interactive.
As individuals have rediscovered the joys of the stock market, online brokerage figures prominently in the portfolios of SME managers. German Flatexdegiro is favored by CM-AM PME ETI and Direct Exchange those of Sextant PME.
E-commerce: a mega-trend
Online commerce is another “mega-trend” that the pandemic has accelerated but which is expected to continue. Alban Préaubert at Sycomore has invested in Hello Fresh (meal delivery).
Raphaël Moreau, manager of Sextant PME at Amiral Gestion again relies on the German furniture distributor Home 24 or Mr Bricolage and his favorite Westwing (decoration). Jean-Pierre Mariaud, head of mid-caps at CM-CIC prefers Swedish BHG, more profitable than Home 24.
Emilie Da Silva, manager of Nova Europe ISR has retained the distributor of industrial valve equipment, Thermador Group, in particular for “reducing its carbon footprint and recycling waste”.
Health: a promising sector
In health, another sector driven by capital flows, Pharmagest Interactive, a healthcare software publisher owned by Pluvalca Initiatives PME, DNCA Actions Euro Micro Caps, Nova Europe ISR …, took advantage of investors’ dual interest in tech and healthcare. Leader in nursing home management, Orpea, is another great fund value appreciated by managers.
The manager of DNCA also relies on Medincell, Nanobiotix and Gensight. Emilie Da Silva is also banking on the development of in vitro fertilization with the Swede Vitrolife. Alban Préaubert from Sycomore Selection PME also appreciates the group’s effort Chargers, newly converted to social responsibility, which emerged from its lethargy by creating lines of health products.
But the most sought-after titles in sectors profiting from the pandemic should not obscure the forest of quality companies growing in their shadow.
Techno and industrial values
These are mainly industrial stocks. Valérie Lefebvre, manager and analyst of DNCA Actions Euro Micro Caps appreciates ID Logistics who did very well in the face of customers with thwarted destinies as well as the German transport specialist IVU Traffic.
Sébastien Lalevée retains the specialist in connected home automation Somfy despite its growing size (capitalization of 5 billion euros), but still little followed by large offices. It has also just reinvested in the business services group Derichebourg and Delfigen to play the electrification of vehicles. And keeps the service group at the heart of the portfolio Teleperformances.
Convinced that consumption will resume at high speed once the virus is under control, he is also betting on Houses of the world and the Fnac Darty who have already benefited from sustained activity last summer. And even Showroom private which he thinks the market does not yet assess for the reorganization.
He also went to look for the gas transport company GTT “Who will benefit from structural growth for a while”. And he reinvested in holdings with historic discounts such as Wendel.
“Even if we remain very invested in technology stocks because the story is not over, we recently reinvested in industrials (Mersen, Manitou) ”indicates Alban Préaubert.
Jean-Pierre Mariaud took advantage of the fall in certain values to strengthen positions, such as Akwel, a French automotive supplier and SAF-Holland, a truck trailer supplier, which “has shown remarkable resilience through this crisis, which is not included in the courses” he adds.
Mergers and acquisitions
We must also position ourselves for the coming recovery and the mergers and acquisitions that will drive the rating.
Another OEM Lectra, specialist in fabric cutting, has it not just benefited from renewed interest thanks to its merger with its American competitor Gerber Technology ? plastic also figures prominently in the funds that have supported its growth.
Likewise, the Allianz Euro PME ETI fund, very focused on the values of Northern Europe, remains loyal to fine industrialists such as the Swedish world leader in machine protection. Iroax or the hearing protection specialist Invisio.
Long-term investments in companies that are sometimes more cyclical but deemed efficient.