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
Stocks flagging as "high risk" for DSI and Inventory Breakdown
Most companies provide a detailed breakdown of overall inventory in the notes to the accounts, showing how it splits into "Finished Goods", "Work in Progress" and "Raw Materials". Forensic Alpha’s systems can now extract this data and analyse changes over time to alert investors of any concerning patterns. European stocks flagging as "high risk" for both DSI and Inventory Breakdown include GN Store Nord, Pandora, SCA and Vestas Wind Systems.
Edition: 175
- 08 December, 2023
Vestas Wind Systems (VWS DC) Denmark
Energy
Blowing through cash - while VWS has delivered impressive top line growth over the past two years, declining cash conversion has received far less attention. The extent of the problem has been masked by the significant increase in the use of supply chain finance since 2019. Management points the finger at elevated capex, though Forensic Alpha’s analysis shows that capex is not out of line with peers. Additionally, the rapid growth in contract assets for the services business may raise questions around the quality of earnings which the market is rating so highly.
Edition: 127
- 21 January, 2022