Several outstanding worldwide investment ideas have been added to the list of “conviction” picks for Stifel, a major U.S. investment bank.
After doing “deeper dives” by its analysts, Stifel increased the number of equities it recommended to purchase. The firm also highlighted several other firms that it claims would profit from a post-pandemic economic recovery, fiscal stimulus, and exposure to China.
Adidas is on Stifel’s list of “preferred” companies. “In our opinion, Adidas is uniquely positioned at the intersection of a growing focus on health, secular athleisure expansion, and home-office adoption,” the analysts wrote. The stock is also appealing to the bank because of its exposure to Greater China and the upcoming sale of its Reebok brand. According to the analysts, a focus on environmental, social, and governance (ESG) factors makes the stock appealing, and an upcoming management update is expected to demonstrate innovation in social responsibility and sustainability. “We anticipate compelling evidence of how product recycling and circularity have evolved into core principles,” said Stifel.
According to the analysts, Arkema, a French chemicals producer, made the list because of its ability to perform well in the short and medium term regardless of commodity price increases. In addition, the company raised its 2021 guidance from a 10% increase in earnings before taxes, depreciation, and amortization (EBITDA) to a 20% increase in its core business. Another factor that makes the stock appealing, according to Stifel, is an upcoming share repurchase program. A buy back occurs when a company uses excess cash to buy back its own shares from investors.
Ferrovial, a Spanish infrastructure firm, is also among Stifel’s top picks. It is one for the “Opening Up Portfolio,” according to the analysts, because of its work on freeways and airports as people resume travel following the pandemic. Federal stimulus plans in the United States and the European Union should also benefit the company, they added.
Kering, a French luxury goods group, is a Stifel recommendation. Kering owns world-famous brands such as Saint Laurent, Bottega Veneta, and Balenciaga. Gucci is a favorite of Stifel’s flagship Italian fashion label. The bank likes its “timeless/classic” items and high exposure to China, and the group is a leader in both digital and sustainability efforts, according to the bank. Kering’s brands are expected to outperform, according to Stifel, when the company releases its first-half results on July 27.
According to Stifel, the shift from brick-and-mortar to online will benefit outsourcing company Teleperformance, which manages digital customer experience for businesses. “In our opinion, the COVID-19 crisis acted as a catalyst for growth acceleration, supporting digitisation and CXM [customer experience management] outsourcing,” wrote the analysts. The bank also anticipates that the French company will make a large acquisition, which will benefit its share price “immediately.”
According to Jefferies, growth will be driven by enterprise business
After the break-up with YouTube, investors’ interest in Vimeo has increased, with two investment firms reinstating coverage of the company with favorable recommendations on Wednesday.
This is the first time Cowen and Jefferies have issued ratings on Vimeo. They have given the company an outperform recommendation and a buy recommendation, with both rating-execs highlighting Vimeo’s enterprise video potential.
“Video in the workplace is still in its early stages, and Vimeo is a leader,” Jefferies wrote in an investor note. “Among other things, there are several use cases within an enterprise, including live-streaming of the NYSE opening/closing bell, AMZN/SBUX using it for workforce training, ZEN using it for conferences, town halls, and live-streaming for customers.”
According to Jefferies, Vimeo’s business model alleviates concerns about inappropriate advertising, which could make potential customers wary of using Alphabet’s YouTube instead.
Similarly, Cowen predicted that Vimeo’s enterprise video subscriptions would grow at a rate of about 31% per year through 2026.
“Our survey of 200 Vimeo subscribers in March ’21 reveals rising video usage post pandemic and high interest in Enterprise subscriptions, which is key to the story, with Enterprise revenue rising from 30% of revenue in ‘21 to 56% in ’26 per our estimates,” Cowen analysts wrote in a note.
Jefferies set a $50 per share price target for the stock, while Cowen raised it to $56. The stock closed just under $43 on Tuesday, so the targets represent a 17-percentage-point and a 31-percentage-point increase, respectively.