London Stock Exchange Group was among he companies that passed Barron’s screen.
Getty Images
As Russia’s invasion of Ukraine develops, it’s time to look for stocks that could avoid the worst of the fallout.
Not unlike many global stock market indexes, the Stoxx Europe 600 has fallen 7% year to date. Plenty of European stocks have been beaten down, creating potential opportunities, but lots of risks remain, not least on the continent’s east.
Barron’s screened for stocks that are both undervalued and have proven to be resilient at key points during this year’s market turmoil. Seventeen names made the list.
As a test of resiliency, we looked at stocks’ performance on Jan. 24, when a combination of tensions in eastern Europe and signs of a more hawkish turn from the Federal Reserve spooked investors, and on Thursday, when Russia launched its broad attack. To make the cut, a stock companies had to have outperformed the broader index on both of those days, as just over a quarter of its constituents did. That’s no guarantee the stocks won’t be hit by further escalation but it is somewhere to start,
To find stocks with room to rise, the screen looked for companies whose average price target from analysts implies a gain of at least 25% from Friday’s closing price. The percentage of analysts holding a Buy rating on the stock, based on ratings issued in the past month, had to be 65% or higher, considerably above the 49% average, according to FactSet.
These companies made the list: Avanza Bank Holding (AZA.Stockholm), bioMerieux (BIM.Paris), EDP-Energias de Portugal (EDP.Lisbon), Euronext (ENX.Paris), Fuchs Petrolub (FPE3.Frankfurt), Games Workshop Group (GAW.London), Gerresheimer (GXI. Frankfurt), Kindred Group (KIND-SDB.Stockholm), London Stock Exchange Group (LSEG.London), MIPS (MIPS.Stockholm), Sartorius Stedim Biotech (DIM.Paris), SEB (SK.Paris), Siemens Healthineers (SHL.Frankfurt), SPIE (SPIE.Paris), Teleperformance (TEP.Paris), and Vonovia (VNA.Frankfurt).
Undervalued Stocks
European stocks that could withstand further escalation between Russia and Ukraine and are undervalued in the eyes of analysts.
| Company / Ticker | Average Price Target | Share Price | Upside % | (%) Buy Rating | Price Change Jan.24 (%) | Price Change Feb.24 (%) |
|---|---|---|---|---|---|---|
| Avanza Bank Holding / AZA.Stockholm | 356.7 | 261.5 | 36.4 | 83.3 | -3.2 | -2.1 |
| bioMerieux SA / BIM.Paris | 133.5 | 95.8 | 39.3 | 72.7 | -0.7 | -3.2 |
| EDP-Energias de Portugal SA / EDP.Lisbon | 5.6 | 4.2 | 32.8 | 81.0 | -2.2 | 5.4 |
| Euronext NV / ENX.Paris | 105.3 | 79.8 | 32.0 | 66.7 | -3.6 | 0.6 |
| Fuchs Petrolub SE Pref / FPE3.Frankfurt | 47.8 | 36.3 | 31.5 | 72.7 | -3.0 | -2.8 |
| Games Workshop Group / GAW.London | 131.6 | 72.8 | 80.9 | 100.0 | -2.9 | -2.7 |
| Gerresheimer AG / GXI.Frankfurt | 99.0 | 66.0 | 50.1 | 75.0 | -0.6 | -2.7 |
| Kindred Group plc Shs Swedish Depository Receipts / KIND-SDB.Stockholm | 141.5 | 101.2 | 39.9 | 83.3 | -3.7 | -1.0 |
| London Stock Exchange Group / LSEG.London | 89.0 | 64.8 | 37.4 | 76.5 | -2.3 | -2.4 |
| MIPS AB / MIPS.Stockholm | 1,146.0 | 698.0 | 64.2 | 100.0 | -3.1 | 2.6 |
| Sartorius Stedim Biotech SA / DIM.Paris | 505.6 | 340.0 | 48.7 | 77.8 | -2.2 | 0.4 |
| SEB SA / SK.Paris | 174.0 | 129.7 | 34.2 | 90.0 | -2.3 | -1.7 |
| Siemens Healthineers / SHL.Frankfurt | 69.6 | 55.3 | 25.8 | 70.0 | -3.7 | 0.2 |
| SPIE SA / SPIE.Paris | 26.7 | 21.1 | 26.2 | 100.0 | -2.9 | -2.6 |
| Teleperformance SA / TEP.Paris | 436.9 | 327.1 | 33.6 | 89.5 | -3.2 | -1.1 |
| Vonovia SE / VNA.Frankfurt | 61.6 | 46.8 | 31.6 | 77.8 | -1.2 | -2.8 |
Data as of Feb.25
Source: FactSet
Here is a look at five of the names:
Energias de Portugal. The company, a specialist in renewable energy also known as EDP Group, rose 5.4% on Thursday despite the wider market slump. As oil and natural gas prices surged, investors began looking to companies providing alternative sources of energy.
Analysts are confident the stock’s potential isn’t just dependent on current circumstances in Ukraine. The average price target implies a 33% gain, and 81% of analysts who follow the stock rates it at Buy. EDP backed up Thursday’s gains with a 4.3% jump Friday as stocks rallied across Europe.
Euronext and LSE. Both exchange operators also look well-placed for gains, according to analysts. Euronext’s average price target implies a 32% gain, while LSE’s suggest the stock could move 37% higher.
Almost 77% of the analysts who follow LSE stock rate it at Buy, the highest percentage in the 20 years covered by FactSets records. The shares are down 6.5% year to date.
Games Workshop. The company, a British miniature-wargaming outfit, has long been viewed favorably by analysts, but the stock’s 27% fall so far in 2022 has positioned the stock for a gain of more than 81%, based on the average price target.
The FTSE 250 company has a strong, loyal customer base. That will be tested given that management recently raised prices to offset inflationary pressures, but the company should come through with flying colors.
Siemens Healthineers. The maker of medical devices, which was spun off from the German industrial conglomerate Siemens in 2018, is another one to watch. It raised its financial targets for 2022 this month, citing increased demand for its rapid Covid-19 antigen tests in Europe and the approval of those tests in the U.S. After a 16% year-to-date drop, analysts’ target prices now point to 26% upside for the stock.
Write to Callum Keown at [email protected]
