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
The China dilemma: US automakers outmanoeuvred by global peers
Consumer Discretionary
Media outlets have been highlighting the China-based R&D efforts of multinational auto brands like Volkswagen, Renault and Hyundai. Notably, autonomous driving, smart cabin technology and lithium battery development are key areas where these brands seek lasting partnerships - sometimes to better localise their China-specific models but increasingly to gain a competitive edge in global markets as well. This poses a thorny question for US automakers pursuing decoupling: on one hand, imitating such strategies is politically unpalatable back home; on the other, an import ban on Chinese cars does not provide full protection, as European and Asian brands are also out-innovating them, often by leveraging their China-based R&D operations. The challenge to US carmakers' global sales may prove greater than some had anticipated.
Edition: 207
- 21 March, 2025
Renault (RNO FP) France
Consumer Discretionary
Woozle upgrades the stock to Buy following their latest interviews with dealers across Europe and the US - RNO prices are +6% Y/Y in 1Q23 following the launch of several higher margin midsized and compact vehicles in 2022. Volumes are +13% Y/Y (vs. consensus of -8%) driven by a 27% increase in sales in Europe, where RNO has gained market share and its Dacia Spring is now the second most sold EV in Europe, behind Tesla. Elevated raw material / energy prices, rising wage pressure and logistical problems are the main risks to look out for 2023. A lack of truck drivers in Europe was also flagged, but this has mostly impacted Volkswagen and Stellantis.
Edition: 158
- 14 April, 2023
Renault (RNO FP) France
Consumer Discretionary
Finally lets Google off the leash - after four years of procrastination, the French car manufacturer has decided that its long-term future in EVs is not to do the software itself. It is the first major OEM to go in this direction and it is going to need to gain some market share to offset the impact of ceding the customer relationship to Google. Given the mess that the rest are in and how important the software user experience is becoming in the vehicle, this might just work for RNO. Qualcomm is also a winner here as RNO appears to be taking the whole QCOM digital chassis offering.
Edition: 148
- 11 November, 2022