European equity fund manager Eva Fornadi believes the team spirit and long-term progress shown by Germany and Holland in the World Cup translates to the corporate industry and reveals her top stocks that boast the same qualities.
The Citywire AA-rated manager of the Comgest Growth Greater Europe Opportunities and the Comgest Growth Mid-Caps Europe Euro said looks for companies that can remain strong players in the future.
'We are looking for companies, which have long-term growth potential, are driven by excellent management execution and offer unique products or services and sound megatrends, e.g. outsourcing.'
Eva Fornadi compares her approach of title selection with that of a football manager, who needs a strong and reliable team rather than just fickle stars.
‘Stars can work famously well, but the approach is fragile - as Brazil found out last night! Strong teams are more reliable and increase visibility for success up to the final.'
'In that sense, we find Messi-centric Argentina more fragile than the European teams left in the competition. History tells us that the German or Dutch approach increases the likelihood of success,’ said Fornadi.
Quick players: the German and Dutch market
One of these team players in the German market is the company ‘CTS Eventim’, a European market leader in ticketing which organises many big European events,from festivals to open air concerts.
With over 20,000 box offices, the company sold 110 million tickets for more than 180,000 events in 2013. The group’s major strengths include scale, dominant positioning in Germany, Austria, Switzerland and Italy (volume market share exceeding 60%).
‘The company benefits from fast online ticketing growth, as more and more people buy their tickets online, which apart from facilitating customer access, also is more profitable than off-line ticketing.’
On to Holland, the German rival and candidate for Sunday's World Cup final. Here, Fornadi also has a company, which from her point of view offers long-term growth due to the good position that the company has within the market.
‘My favorite Dutch mid-cap is Corelabs, which focuses on outsourcing for oil majors that need to exploit more complex oil fields and shale gas reservoirs facing ultra-high temperatures and pressures.’
‘Corelabs provides sophisticated products (e.g. for rock perforation) and it is therefore in a unique position. The company grew sales and EPS between 2007 and 2013 with a CAGR of 8% and 13.5% despite a major industry crisis in the wake of the global financial crisis and kept EBIT margins in every year above 25%.’
Who will be the World Cup winner?
‘When talking just about the European equity market, then I would of course choose a company that offers long-term growth, so my favorites are clearly the Dutch and the Germans.’
‘But if we are talking about football, then I will simply say: may the best team win!’
Eva Fornadi achieved a total return of 55.25% over three years. This compares to a total return of 29.62% from the average manager in the European Equity Sector.