Another 10 randomly selected Swiss stocks with a very short “high level” analysis. This time around, I’ve actually identified three companies that are worth watching. Enjoy !!!
51. Sika AG
Sika is a specialty chemicals company with a market capitalization of CHF 43 billion that manufactures materials for the construction sector. What makes the company particularly interesting is the fact that while the stock was very bland on the surface, it has risen 10x over the past 8-9 years. Sika could not stop Covid-19 either:
According to the IR presentation, the company grew double-digit in 2018 and 2019 and the EBIT margin exceeded 14% in 2020. The company forecasts growth of 6-8% and an EBIT margin of 15-18% for the future.
The company claims to be very active in carbon-reducing solutions like concrete recycling, which could explain why the Gates Foundation owns 5% of the company. The company is controlled by the Burkard family, who hold 16% of the shares but control 51% of the votes through a typical Swiss A / B share structure.
Interestingly, Sika was the target of a long-term takeover attempt of Saint Gobain, which ended unsuccessfully in 2018/2020. So it seems that Sika is currently not controlled by anyone.
The downside is that the valuation is currently around 50 times the 2020 profit. Even with the targeted profit growth, it looks “fully valued” to me. So unfortunately this is a “consist” due to valuation problems. However, Sika is a good example of how even a super boring company can transform itself into a highly interesting “Quality Growth” stock.
52. Ascom Holding AG
Ascom is a company with a market capitalization of CHF 560 million that operates in the healthcare and telecommunications IT sector. On the plus side, the company had relatively stable sales in 2020, a very nice increase in cash flow, and no funding
Fault. On the negative side, Ascom’s share price has stagnated for a very long time:
The business appears to be very project driven (recurring revenue ~ 25%). If you compare 2020 to 2016, it’s pretty clear that they haven’t made much progress in the last 5 years or so. With a targeted EBIT margin of 10% in 2021 and a single-digit increase in sales, Ascom is still trading at ~ 17xEV / EBITDA, which appears to be fully valued for such a business. “consist”.
53. Rieter Holding AG
Rieter is an old-school industrial company with a market capitalization of CHF 850 million that manufactures machines for the entire value chain of textile production.
The company was hit hard in 2020 due to Covid and suffered significant losses of -16% negative net margin and 1/3 decline in sales, indicating the clear cyclical nature of the business. The share price has since rebounded to the levels at which the stock has traded in the past 10 years or so:
Personally, I somehow lack the perspective of how this company can create a lot of shareholder value in the future, so I will “consist”.
54. UBS AG
UBS is the best-known banking / asset management group in Switzerland with a market capitalization of CHF 55 billion. On the surface, it looks like a “value” stock with a trailing P / E of ~ 8. On the positive side, the returns rose significantly in 2020, the return on equity at around 10% is quite acceptable for a bank and, unlike its local competitor Credit Suisse, UBS has avoided being drawn into most of the scandals (Greensill, Wirecard) , although Archegos cost almost 800 million, which is only a fraction of the 4.5 billion hits from Credit Suisse. Additionally, they have a new CEO in Ralph Hamers who not only has a pretty cool name for a CEO but also has a great track record in shaping ING into Europe’s leading digital bank.
On the negative side, UBS’s business model, which combines investment banking with high net worth wealth management, is clearly combined with positive capital markets. The current environment with many IPOs and strong performance, especially in alternative asset classes, is a “goldilocks” environment for UBS.
The stock exchange does not believe that UBS can continue on its previous course. If I were forced to invest in a bank, UBS would be clearly on my shortlist. On the other hand, one could argue that the market seems to have priced in future risks to some extent, which could make UBS interesting, especially if there were a wave of consolidation in the European banking sector. Still, I’m not a fan of “Big Banks” and “consist”.
55. Glarner Kantonalbank
The Glarner Kantonalbank is a regional bank with a market capitalization of CHF 340 million in the canton of Glarus. With a P / E of 13 and a dividend yield of around 3.7%, it is one of the cheapest Swiss stocks. I find it remarkable that the bank has succeeded in significantly increasing profits over the past 10 years despite negative interest rates. Environment in Switzerland . For example, since 2014 they have more than tripled the EPS from CHF 0.60 to> CHF 2 in 2020, which is not really reflected in the share price:
From what I read in the last annual report, the municipalities still hold ~ 85% of the shares overall, but it seems that the bank is to be further “decoupled” from the cantons.
Overall, I find the situation quite interesting and want to know more about it. “Clock”.
56. SIG Combibloc AG
The SIG Combibloc Group went public in 2018 and was previously held by a PE investor. Since then, the share price has slowly developed through constant appreciation:
The company with a market capitalization of CHF 8.4 billion is mainly active in the (paper) packaging sector and did quite well in 2020 with slightly increasing sales. The adjusted EBITDA margins look very good at around 28%.
The “adjusted” net profit is around 230 million CHF, similar to the free cash flow, which results in a PER of 36; the actual net profit was significantly lower at 68 million CHF. As a former PE company, they also have debts of around CHF 1.3 billion.
Overall, SIG looks like a solid quality company, but the share price looks like “fully valued”. So i will “consist”.
57. Adval Tech Holding
Adval is a small company with a market capitalization of CHF 129 million that manufactures metal and plastic components.
The company had been stagnant for a few years before Covid-19 hit and profits dropped around -50%. This shows in the uninspiring graphic:
At first glance, it doesn’t look like anything will change for the better in the future, so I will “consist”.
58. Datacolor AG
Datacolor is a company specializing in colors and printing with a market capitalization of CHF 109 million. Your 2019/2020 fiscal year (end of September) was negatively impacted by Covid, resulting in a loss. The first 6M 2020/2021 looked much better.
Looking at the long-term chart, there seems to be some added value, but with lots of ups and downs.
On the positive side, the company seems to have been able to grow at least in the low single digits for some time and seems to be sitting on substantial net cash, which according to the semi-annual report is CHF 49 million or almost 50% of market. Assuming a sustained recovery, this makes the share extremely cheap (6M profit at around CHF 5 million).
On the minus side, the stock is super illiquid. ~ 83% are owned by a pool of shareholders.
However, this could be a stock to look into a little closer. “Clock”
59. Meier-Tobler AG
Meier-Tobler is a company with a market capitalization of CHF 211 million that specializes in heating, ventilating and cooling buildings. The company is the result of a merger between Walter Meier AG and Tobler 4 years ago, which did not work out really well, as can be seen in the share chart:
Interestingly, UK major shareholder Ferguson Plc sold its 29% stake for CHF 8.75 / share last year, which doesn’t look like a smart move at the moment. The majority owner Silvain Meier offered all minority shareholders a stake at the same price, which I find very shareholder-friendly.
The shares have now more than doubled. With a current turnover of around CHF 500 million and assuming that Meier & Tobler returns to the old profitability (~ 8% EBIT margin), Meier Tobler could be really interesting.
I also think their business could be positively impacted by the ongoing decarbonization and energy transition, as buildings are a major contributor to carbon emissions and a lot needs to be done (and modernized) to reduce the carbon footprint of the sector.
That’s why I have Meier Tobler on mine “Clock” List for deeper analysis.
60. Calida AG
Calida is a textile company with a market capitalization of CHF 300 million, mainly active in the underwear and lingerie sector. The business had a low margin (~ 8% EBITDA margin) prior to Covid-19 and has not improved during the pandemic.
The company has net cash, but sales have stagnated for some time in line with the share price, which has done nothing for the past 10 years. “Consist”.