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Duel of small values: the Spanish listed companies beat the European ones in increases

Date: October 4, 2023 Time: 16:51:18

Iberdrola, Banco Santander, Inditex, Telefónica… However, there is also a whole army of small and mid-cap stocks that stand out for being pioneers in their sector or having a leading business model in their area, which is no stranger to on the radar of many analysts. Although it is not yet known if the Ibex 35 will manage to beat the rest of its comparables during 2023. What is clear is that one of its children -the Ibex Small Cap- leads the way in Europe. This index, which brings together 30 small-cap companies, is nearing the middle of the year with an annual rise of 6.8%.

Although the favorable winds that blew at the start of the year -in January it appreciated more than 17.5%- has faded and the figure leaves something to be desired when compared to its ‘older sister’, in practice it appreciates more than the Stoxx Europe Small 200, which loses the race and rises a slight 5.2% so far in 2023. With more than obvious differences in size, since the first consists of 30 members and the second of 200 members, the Ibex Small Cap has almost all of his values ​​positive.

Among them, Audax Renovables stands out, which has already increased in value so far this year by more than 64%, to 1.23 euros per share. Part of this rebound occurred in the first half of May, in the heat of some results that were well received by investors. The group headed by José Elías has opened a new stage in 2023 in which it has managed to consolidate the profit after coming out of losses in 2022, as well as reduce debt, despite the fact that its leverage ratio remains above 70%. This ‘stock market acceleration has even led Airtificial Intelligence to unseat from the podium (53.2% in the annual calculation), up to 0.08 euros per share at the close of the markets this Friday and moves to third position.

Until April, the robotics and engineering company led the increases, a revaluation that reached up to 120% at the beginning of the year, when two historical shareholders in the capital were reinforced in the capital, Leonardo Sánchez-Heredero and Ladislao de Arriba , which already control almost 45% of the firm, an increase in positions that coincides with the departure of Black Toro Capital (BTC) from the capital, as published by this medium. Berkeley Energía completes the shortlist, which this week has jumped to the forefront of the stock market and is already the second value that advances the most, with a ‘rally’ of 53.6%, up to 0.28 euros per title.

The Australian firm that owns the Retortillo uranium mine (Salamanca) shot up almost 22% on the day of the announcement of the early elections due to the possibility of a change of central government after the victory of the PP in the reactive regional and municipal elections this project, blocked by the Ministry of Ecological Transition and Demographic Challenge. At the close of the markets this Friday, more than half of the list beats the index in annual gains, among which Reig Jofre (16%), DIA (+11.8%), Neinor Homes (+10%) stand out. In fact, only Urbas Grupo Financiero (-44%) registered losses, Amper (-32%), Atrys Health (-21.7%), Orizon Genomics (-16.1%), Grupo Ecoener (-2.4%) and the construction company San José (-1.5%).

On the contrary, the evolution of the Stoxx Europe Small 200, which has jumped more than 2% this Friday, is weighed down in the year as a whole by brick, especially by the Swedish firm SBB, which reduces its losses to 70% after several investors have shown interest in their assets. The increase in interest rates has caught the group seeking to improve its financial situation on the wrong foot and has canceled the distribution of the dividend. This situation has dragged down the Luxembourg company Aroundtown, which loses another 54% along the way.

Of the 200 members of the index, 75 suffer red numbers. On the contrary, the German software firm Nemetschek (+56.8), the Swedish Addtech (+52.9%), the fashion company Marks & Spencer (+50%) and the technology company SimCorp (+50%) resist. . The gap is also significant when making a comparison of its potential. While the Spanish can go up more than 57%, according to the ‘Bloomberg’ consensus and six out of ten analysts recommend buying it and none due to betting, in the case of the European the figures are somewhat more modest. The analysis houses have a fairly divided opinion on buying or holding, although they believe that it may revalue something less than 20%.

With all this, it should not be forgotten that the gains for both are quite limited if one takes into account the strong start to the year they experienced. By their very nature, small-cap stocks excel at running when the weather is favourable. But when the scenario is not looking so optimistic, they tend to suffer much more, since fear and uncertainty cause investors to take refuge in larger stocks that are less subject to volatility. Just look at the Ibex 35 or the Stoxx Europe 50, which almost tripled its rebound.

“Small securities are more affected by the current environment of uncertainty about the economic cycle, to the extent that liquidity is the main problem we find ourselves when investing in this type of company”, precisely the Income analyst 4, Natalia Aguirre, who emphasizes that liquidity is one of the main problems faced by this type of securities. Despite this, the expert points out that you can find “very specialized niche companies, which are leaders in the sectors in which they operate and that you can find much more hidden value” compared to the Ibex 35. “Although until there is more Clarity on the macro environment, small stocks could have a worse relative performance than blue chips, I do believe that there are interesting opportunities in the medium term”, he remarks.

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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