Is it finally time to buy Cyclicals?
At a time when economists are slashing year-end targets for major equity indices, star asset managers are forecasting the dollar’s demise, the collapse of the US economy and gold prices surging further, the real story has already begun and it’s the exact opposite. Recent sector rotation suggests markets are anticipating a brief global GDP contraction, followed by a rapid and robust rebound. Q1 results in Europe are strong. Companies are quickly adjusting supply chains to outmanoeuvre Trump’s tariffs. By early Jun, the tariff story will be old news and business will be almost back to normal. Stop overthinking and trust corporate agility. The real opportunity is in quality cyclicals - cash-rich, order-heavy, sector-dominating companies with rock-solid fundamentals. AIR’s top picks include Airbus, ASM International, Renault, Rexel, Schneider and Vestas Wind.
Edition: 210
- 02 May, 2025
Airbus (AIR FP) France
Industrials
Questions management's narrative of experiencing a strong recovery from Covid - AIR achieves the highest risk rating in Forensic Alpha’s universe after several new flags are identified in its annual report. This follows the publication of FY results where Forensic Alpha had already picked up on growing DSO and Contract Assets. Receivables past due has risen from 18% of trade receivables in 2020 to 29% in 2021. AIR now has more than €1bn of trade receivables past due more than 3 months (equal to more than 20% of invoices). Furthermore, a massive €635m of those receivables are past due more than 1 year!
Edition: 134
- 29 April, 2022