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ASML RISING: Weekly MACD cross up, daily EMA 34/20 cross up.After a clear double bottom AND ASML being the MOST OVERSOLD EVER in the history of this stock, we have a nice +/- 10% upside opportunity on the swing up, with very attractive risk reward ratio (depending on where you anchor your stops but I leave that to you). Daily chart has showed us a lot of bullish divergence over the past weeks and it's clear traders have been loading up on cheap ASML shares while this unique opportunity presented itself and this has slowly exhausted the sellers over the past month, making it ripe for a jump. ASML is ready for a major run up. What I like about this setup is that even if I am wrong about the mid-long term of this move. I capitalize on the short term momentum of the move with minimal exposure to risk. This stock is volatile and I take that into consideration when trading it. I am no expert and none of this is advice, just sharing how I see things, trade at your own risk. Wish you good luck and good fortune!
EURONEXT:ASMLLong
by STATICERROR
Little bull call spread on StellantisI believe we are in the end of an accumulation. We had bad news lately about this company and his CEO. I don't want to own the stock, specially in this part of the economic cycle. This is purely a speculative trade. There is a divergence in the awesome oscillator marking a possible end of the bear trend and right after, a period of low volatility characteristic of accumulations as we can see in the multiple historical volatility oscillator below. A spring a few days ago confirmed there were strong buyers. Now we are against the trendline. So, I believe it's cheap (from ~€25 went down to ~€12,50) and it should make a bullish move shortly. Strategy: Bull call spread Expiration: 17 JAN 2025 (45 days to expiration) Legs = +2 calls 13 and -2 calls 14 Premium = 0.27 * 100 stocks * 2 q per leg = €54 Max gain= €146 Risk / Reward = 2.7 Commissions= €1.5 (only open) Break-even = From 13.27 (lower call + premium) Historical Volatility (45 days) = 35,85% Implicit Volatility = ~31% In English: If the underlying (the stock) arrives at 13.27 I start earning money. If it gets to 14 or if it surpasses this price, I get to the max reward. I can lose at the most €54 + commisions even if the stock goes to €1. The blue lines in the chart represent Breakeven, Max reward price and Expiration so I can follow the underlying. Now it's time to follow the DOM for each option. I hope this process of thought helps you in your trades, specially if you are now to options.
EURONEXT:STLAPLong
by NicolasRZ
PROSUS is one of the most interesting EU stocks (+30%)🟢 PROSUS is one of the most interesting EU stocks (+30%) EURONEXT:PRX is one of the most interesting stocks in the EU, investing in small projects with large potential and also some consolidated projects like tencent. ✅ What pattern is unfolding in EURONEXT:PRX ? PRX traded over a previous resistance level (big blue line) and now we are see a pullback to the previous resistance. 💰 How to trade this chart pattern? Buying near the blue support is a very good idea because you can have a potential of up 6 times your risk (30% benefits vs 5% risk) If not, buying over the next green resistance could be a nice option because is a signal of bullish sentiment and then we will not see the price near the blue line. If you buy there, adjust the stop! 🛡️ The risk management strategy As we have done in so many previous ideas, remember you can split the position in 2. - 50% of the position in a take profits, at least, as large as your stop loss (adapt SL and this 1st TP to local supports/resistance levels). In this case, a 7% TP for 5% SL (see the chart) - 50% of the position to a price as large as the previous pattern, which would mean a profit of 30%. ✴️ ENJOY AND FOLLOW for more 😊
EURONEXT:PRXLong
by TopChartPatterns
easy play on ASMLI’ve been closely monitoring the monthly chart of ASML Holding (Euronext) and have identified a compelling setup that aligns with my long-term strategy. Previously, I shared an idea on TradingView with an ambitious $1200 price target, based on the stock’s strong long-term uptrend and solid fundamentals. However, upon further analysis, I’ve identified an internal trendline, which provides additional clarity and reinforces my bullish outlook. Interestingly, a similar internal trendline has been observed in other stocks like Super Micro Computer, further validating this structure. Technical Analysis: Primary Uptrend: ASML is in a well-established long-term uptrend, confirmed by the primary ascending trendline connecting historical lows since 2012. This line showcases the structural strength of the stock and consistent investor confidence. Internal Trendline Confirmation: The recently identified internal trendline connects intermediate lows formed during price retracements, indicating a temporary slowdown in growth while maintaining an overall bullish structure. This internal trendline has previously acted as dynamic support, suggesting it may serve as a critical reference point for future price action. Key Price Levels: The current price (631.5 EUR) sits near a confluence zone between horizontal support and the internal trendline. This presents a strong entry point for a long position with an attractive risk/reward ratio. Significant support has been identified around the 600 EUR level, reinforcing my confidence in a potential price rebound. Long-Term Price Target: My long-term price target remains at $1200, which I believe is achievable as the stock continues to respect its bullish trend. This target aligns with ASML’s historical growth trajectory and the robust potential of the tech sector. Entry Timing: The recent bounce off the internal trendline and the +1.66% daily gain signal positive accumulation and increased buying interest. I plan to go long now, taking advantage of the dynamic support, with a stop loss set just below 590 EUR to manage risk effectively. ASML Holding offers a compelling investment opportunity, supported by a solid technical structure and clear bullish potential. The internal trendline, combined with horizontal support and the broader long-term uptrend, strengthens my confidence in entering a long position. With a $1200 target and a well-defined risk management plan, I believe this is the right time to position for the next leg up in this stock.
EURONEXT:ASMLLong
by TheAverageTrader00
7
Stellantis cornered: Will it be able to reinvent itself?Paris is at a critical point. Marine Le Pen and her party, Rassemblement National, are pushing for changes to the 2025 budget, threatening a motion of censure that could destabilize the government. Political instability has severely impacted French bonds, intensifying concerns about the stability of the eurozone. In the midst of this crisis, Stellantis (Ticker AT: STLA.IT) is going through a complicated phase. Carlos Tavares, the company's CEO, resigned unexpectedly after a year marked by a 40% drop in the value of its shares, a profit warning and a cash burn of 10 billion euros, factors that have eroded market confidence. Stellantis currently trades at 11.990 euros, well below the 27.345 euros recorded in March. This fall has placed it in a sideways range between €15.972 and €10.448. From a technical point of view, the RSI is at 30.20%, reflecting a significant oversold level. However, the technical picture is unfavorable: on the weekly chart, since July 29, the 50-day moving average has crossed the 100-day downwards, while the 200-day average is approaching a crossover with the 100-day, which would confirm a more pronounced downtrend. On the daily chart, this crossover has already materialized, reinforcing a bearish expansion. At this juncture, John Elkann, chairman and major shareholder through EXOR (AMS:EXOR), will lead an interim committee until a new CEO is elected in 2025. The company's ability to get through this stage will depend on its ability to implement effective strategies and restore investor confidence. Stellantis is facing a turning point, both technically and fundamentally. Will it succeed in reversing the trend and strengthening its position in the global market? The next strategic decisions will be key to determine its future. Ion Jauregui - ActivTrades Analyst ******************************************************************************************* The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication. All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
EURONEXT:STLAPShort
by ActivTrades
ASML is no longer bullish🔴 ASML is no longer bullish EURONEXT:ASML is one of the most interesting companies in Europe by far, but recently has broken a very large trendline meaning that at least, we are moving to a NEUTRAL or BEARISH market. ✅ What pattern is unfolding in EURONEXT:ASML ? The pattern is one of the simplest that exist. A simple trendline, but look, is a very large trendline of more than 5 years and multiple touches. Breaking this kind of pattern is a major signal that you can't avoid. 💰 How to trade this chart pattern? Once the trendline is broken, you can trade in any pullback or any new low done, searching for the upcoming bear market. Take care with longs here, you are probably seen a dead bounce cat. ✴️ ENJOY AND FOLLOW for more ideas 😊
EURONEXT:ASMLShort
by TopChartPatterns
9
Renault Accelerates Towards the Electric Future From Shanghai! Renault (Ticker AT:RNO.FR) is taking a decisive step in the electric vehicle revolution by hiring 200 specialized hardware and software engineers in Shanghai, the epicenter of global technological innovation. Although it does not market vehicles in China, Renault is taking advantage of this strategic move to develop an affordable electric Twingo , with the intention of leading the transition to sustainable and affordable mobility. This news has been enthusiastically received by the markets since the European opening. Currently, the share is moving away from its recent low of €38.35 and is trading around €39.50, very close to the checkpoint (POC). In addition, the 50 moving average seems to be heading towards crossing the 100 moving average, which could signal an upward trend reversal. The relative strength index (RSI) is at 51.60%, indicating a possible strengthening in price. It would not be surprising to see the share price recover towards €42 in the short term. With the backing of Chinese technological talent and its focus on innovation, Renault reaffirms its commitment to an electric and promising future in the competitive automotive market. The direction is clear and the upward path seems inevitable! Ion Jauregui – ActivTrades Analyst ******************************************************************************************* The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication. All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
EURONEXT:RNOLong
by ActivTrades
Can Tencent salvage Ubisoft's sinking ship?Ubisoft’s stock pumped 35% couple of days ago following a Bloomberg report suggesting that Tencent may either acquire the company or take it private Although the French gaming company didn’t confirm or deny the speculation, it did state that it’s considering "all strategic options" for the benefit of its stakeholders and will notify the market when necessary If Tencent proceeds, it would mark another significant acquisition in a wave of major gaming deals over recent years: - Activision Blizzard acquired by Microsoft for $69 billion in 2023. - Zynga acquired by Take-Two for $12.7 billion in 2022. - ZeniMax Media acquired by Microsoft for $7.5 billion in 2021. - Savvy Games acquired by Scopely for $4.9 billion in 2023. - Bungie acquired by Sony for $3.7 billion in 2022. - Glu Mobile acquired by EA for $2.4 billion in 2021. - Keywords Studios acquired by EQT for $2.4 billion in 2024. Ubisoft’s valuation sits at just $2 billion, nearly 90% below its peak in 2021! The stock fell by more than 40% in September alone, so this recent surge is only a brief reprieve. Given its diminished value, a potential buyer offering a premium wouldn’t necessarily be a massive win. So, how should we interpret this news, and what can we anticipate for future gaming M&A activity? Let’s break it down. Key Points 1.Ubisoft’s Challenges 2.Potential Buyers 3.IP Gold Rush 4.Future of Gaming M&A 1. Ubisoft’s Challenges Ubisoft has faced setbacks including canceled games, delays, and a dip in quality in the post-pandemic era. Let’s take a look at the fiscal year 2024, which ends in March. Consider this metric reflects the total amount spent by users within a period, covering game sales, in-game purchases, subscriptions, and downloadable content (DLC). It’s an important measure of business performance, with net bookings recognized as revenue over time, depending on content delivery and user engagement Key takeaways: Digital-first: 86% of Ubisoft's net bookings come from digital sales (premium, free-to-play, and subscriptions). It was 12% in 2013, illustrating the transformative past decade. Far behind on mobile: Ubisoft has trailed its peers, with only 7% of revenue coming from mobile. In contrast, nearly half of the industry’s revenue comes from smartphones. Margins improved after cost-cutting: Digital games are a high gross margin business, particularly with the back catalog (title released in previous years) making up nearly two-thirds of net bookings. Targeted restructurings impacted FY23, making the short-term margin trend misleading. Ubisoft laid off 1,700 employees between September 2022 and March 2024, roughly 6% of its workforce. Short-lived turnaround: FY23 was a challenging year, with Net bookings collapsing by 18% with the underperformance of Mario + Rabbids: Sparks of Hope and Just Dance 2023. In FY24, Net bookings rebounded sharply, growing 34% with the successful release of Assassin’s Creed Mirage and The Crew Motorfest. FY25 Collapses in a Week: After the underperformance of Star Wars Outlaws (released at the end of August and originally expected to be a blockbuster) and the delayed launch of Assassin’s Creed Shadows from November to February, Ubisoft revised its FY25 net bookings forecast down to €1.95 billion, a 16% decline year-over-year (compared to the "solid growth" expected earlier). The company now anticipates barely breaking even on an adjusted basis. The decision to delay Assassin’s Creed Shadows just weeks before its scheduled release was influenced by the poor reception of *Star Wars Outlaws*. However, the three-month delay might not be enough to resolve concerns over game quality or criticisms from the Japanese community regarding historical and cultural inaccuracies. But that’s not all! In addition to these financial and operational difficulties, Ubisoft has faced allegations of a toxic workplace. Several former executives from the *Assassin’s Creed* studio were arrested as part of an investigation into sexual assault and harassment. This situation mirrors the downfall of Activision Blizzard in the months leading up to its acquisition by Microsoft, which leads us to potential buyers for Ubisoft. 2. Potential Buyers Ubisoft remains a family-run company, largely overseen by its founders. The latest annual report reveals the following voting rights: - The Guillemot family controls 20.5% - Tencent owns 9.2% In September, minority shareholder AJ Investments claimed it had gained backing from 10% of shareholders and called for Ubisoft to be sold or taken private, estimating a fair value of €40 to €45 per share. With shares currently trading at €13, this seems highly optimistic. So, who are the likely candidates for a Ubisoft buyout? Key Players: -Tencent: Already a significant shareholder, Tencent could increase its stake or seek majority control. As the largest gaming company globally by revenue, Tencent has a history of acquisitions, such as its purchase of Finnish publisher Supercell (*Clash of Clans*) for $8.6 billion in 2016. However, Tencent's aggressive expansion has drawn regulatory scrutiny, especially in the US and Europe, which could complicate any attempt to acquire majority control of Ubisoft. Guillemot Family: The founding family might be interested in reclaiming greater control of Ubisoft and steering it in a new direction. To finance the buyout, they could collaborate with a private equity firm or a strategic investor. However, given Ubisoft's current size and the significant cost associated with a buyout, it could be difficult for the Guillemot family to pursue this path on their own. Other Potential Investors: Private equity firms or strategic investors within the gaming sector might also join a buyout consortium. These investors could be drawn to Ubisoft’s valuable intellectual property (IP) and see potential for a turnaround under new leadership. Gaming Companies: Besides Tencent, the largest gaming revenue players in 2023 are highlighted in the visual. -Apple and Google: Although both tech giants have been expanding into gaming, acquiring Ubisoft seems unlikely given their current antitrust scrutiny. -NetEase, EA, and TakeTwo: These companies would find an Ubisoft acquisition to be a straightforward studio consolidation. NetEase, in particular, might find it appealing to broaden its console and PC presence in the West, but Tencent’s involvement could complicate this. -Sony and Microsoft: As first-party publishers, both would benefit from boosting their subscription services with exclusive content. They’ve aggressively acquired studios in recent years. Given that the Activision Blizzard deal was approved, there’s no reason a Ubisoft acquisition couldn’t pass as well. In their latest fiscal year, gaming accounted for 32% of Sony’s revenue and less than 9% of Microsoft’s. 3. IP Gold Rush In the gaming industry, intellectual property (IP) is crucial. Iconic franchises like *Call of Duty*, *Mario*, and *Grand Theft Auto* are multi-billion-dollar assets that significantly impact a company’s future. As a result, many companies are eager to acquire established IPs or gain access to the teams behind them. Why is IP so valuable? -Lower risk: Developing a new AAA game can cost hundreds of millions and take years, with no guarantee of success. Acquiring a popular IP allows companies to tap into an existing fanbase and reduces the risk of failure. -Brand power: Consumers are more inclined to purchase games with familiar characters, worlds, or studios behind them. Well-known creators like Hideo Kojima (*Metal Gear*) and Hidetaka Miyazaki (*Elden Ring*) are just as significant. -Content scalability: Famous IPs can generate revenue through sequels, spin-offs, and licensing deals. Large publishers have the infrastructure to maximize returns across multiple channels. This strategy isn’t unique to gaming. Media giants follow similar patterns: -Amazon’s acquisition of MGM: In 2021, Amazon acquired MGM for $8.5 billion, gaining access to franchises like *James Bond* to enhance its Prime Video content. -Disney’s acquisition of Lucasfilm and Marvel: These acquisitions have delivered massive returns through movies, TV series, and licensing opportunities. Why now? -Consolidation pressure: Subscription services and cross-platform gaming are driving consolidation. Big companies want to secure valuable IPs to differentiate their services and attract loyal customers. Meanwhile, smaller studios are more open to selling early to avoid competing in an increasingly crowded and capital-intensive market. -Value in ownership: Owning IPs in gaming allows companies to create expansive worlds and engage players long-term through updates, expansions, and live services. This keeps players coming back and generates recurring revenue, which is harder to achieve in video content. -Cross media expansion: Popular games can expand into movies, TV series, or theme parks. For instance, *The Last of Us* became a hit HBO show, and Sony is developing TV adaptations for Horizon Zero Dawn and God of War. This leads to more revenue, a broader audience, and long-lasting IP appeal. The Ubisoft Angle Ubisoft’s IPs, like *Assassin’s Creed*, *Far Cry*, and *Tom Clancy’s Rainbow Six*, have significant potential for future growth, despite recent struggles. However, realizing that potential might require new leadership or a fresh strategy, which a new owner could provide. Even though Ubisoft faces challenges, its strong portfolio might attract various buyers. For the right acquirer, Ubisoft's problems could represent a chance to buy low and rework its creative direction. As more studios seek to hedge their risks in this changing industry, we can expect more mergers and acquisitions (M&A) in the future. 4. The Future of Gaming M&A The gaming industry is constantly evolving, and several trends are fueling a surge in mergers and acquisitions: -Mobile-first: Mobile gaming is the largest and fastest-growing segment, making companies with a strong mobile presence attractive. Examples include Playrix (Gardenscapes,Homescapes) and Scopely (MONOPOLY GO!,Stumble Guys) -Cross-platform: Cross-platform play is becoming the standard, and companies with expertise in this area are in high demand. Unity and Epic Games play vital roles with their popular game engines, while major studios are also building in-house solutions. - Cloud gaming: Still in its early stages, cloud gaming has the potential to revolutionize how games are played. Companies with cloud infrastructure are becoming more valuable, with leaders like Microsoft (Game Pass Ultimate), Sony (PlayStation Plus Premium), and NVIDIA (GeForce Now) pushing the trend. -Metaverse: Beyond AR/VR, virtual worlds like *Roblox* and *Fortnite* have created immersive, social spaces that keep players engaged beyond traditional gameplay. Companies developing these experiences are attractive targets for firms looking to capitalize on this trend. -Web3 & Blockchain: Web3 games enable decentralized ownership and in-game economies powered by blockchain. This trend lets players own and trade digital assets, opening new revenue streams and drawing interest from companies exploring the intersection of gaming and crypto. -AI driven studios: AI is already influencing game development, and its role will only grow. Companies with AI expertise, particularly in game design and player behavior analysis, are becoming highly sought after. As AI reduces development costs, budgets could shift towards live services and marketing. The Big Picture The gaming industry is consolidating, with major players acquiring valuable studios and IPs. While there will always be space for indie games—especially as AI lowers the barrier to entry—industry consolidation will likely strengthen the top companies and leave less room for those in the middle. If a company like Ubisoft, valued at over $12 billion in 2021, is struggling to survive on its own, the future looks bleak for many smaller studios
EURONEXT:UBI
by moonypto
4
L'OREAL: Targetzone Ahead!The L'oreal stock is undergoing a correction phase, with the possibility of further declines into the €300 - €270 support zone. This level is marked as a strong long-term buy opportunity for investors, and price recovery is expected from this zone. Should this correction unfold as anticipated, the stock could rally with potential targets at 375 and €400+ in the longer term. Thank you for taking the time to read my analysis. I look forward to reading your thoughts. Best regards, Mattner no investment advice
EURONEXT:ORLong
by MattnerFuture
ASML Trade Idea: Riding the Uptrend with CautionAfter some time away, I’m back with a fresh ASML setup. I’ll keep this analysis simple and focus on the key points. Market Structure and Trend Analysis ASML remains in a strong uptrend on higher timeframes, although there has been a Change of Character (CHOCH) on the shorter-term trend, indicating a corrective phase. This recent pullback looks like a corrective pattern within the larger monthly uptrend, potentially offering a buying opportunity if the main trend resumes. Technical Overview The price has tested the trendline for the third time and briefly dropped below it, which could attract short sellers and create liquidity for larger players. I’m eyeing the -27% Fibonacci extension as a full-wave target for this setup, but I plan to take partial profits along the way, starting with 25% at a 1:3 risk-to-reward ratio. Risk Management and Seasonal Insights I’m risking 1% of my account on this trade, maintaining a conservative approach. Additionally, we’re currently in the “Halloween Effect” period, where the market often performs well from October through December, providing a seasonal tailwind. Fundamental Context Recent negative news around ASML may create a bearish narrative that could mislead retail traders. I interpret this as a buying opportunity, aligning with the overall bullish trend and offering a favorable risk-to-reward setup.
EURONEXT:ASMLLong
by Ylo
The European Diaper King: Ontex GroupCompany Overview Ontex Group, a Belgium-based company, is one of Europe’s largest producers of diapers, primarily focused on supplying white-label (non-branded) products to retailers. Despite being relatively unknown to the general public, Ontex's products are widely used across Europe and, increasingly, in the U.S. Initially, Ontex pursued a growth strategy centered on expanding into emerging markets with branded diaper products. However, this approach fell short of expectations, leading to a drop in its share price from €30 to around €5, positioning the company as a potential acquisition target. Strategic Shift and Current Focus To improve financial stability, Ontex pivoted its strategy toward producing white-label diapers rather than branded products. Additionally, it has gradually divested from emerging markets, with the final sales currently underway, refocusing on its established European market and expanding into the U.S., where white-label diapers are a growing segment. This shift is in line with increased cost-consciousness among U.S. consumers, especially in light of rising living expenses and a preference for domestic products over imports from countries such as China. Market Position and Opportunities Ontex operates in a relatively stable market, supported by consistent demand for diapers driven by birth rates and demographic trends. While European market growth is constrained by low birth rates and economic challenges, the U.S. market presents significant opportunities. Currently, white-label diaper products occupy a smaller share in the U.S., but this is changing as consumers look for cost-effective alternatives, which supports Ontex’s expansion and revenue potential in the region. Financial Performance and Valuation Ontex is currently undervalued at approximately 5 to 6 times EBITDA, with a market cap of around €600 million. The company’s board has introduced an incentivized stock options program for management, designed to encourage significant share price growth. If successful, the CEO stands to receive €16 million if Ontex’s share price doubles by the end of the upcoming fiscal year. This aligns management's interests with shareholders and may indicate a higher likelihood of short- to mid-term stock appreciation. Acquisition Potential Ontex has garnered interest from private equity firms due to its reliable revenue base in the diaper industry. The company’s restructuring and focused U.S. expansion increase its attractiveness as a takeover target. In addition, Ontex’s largest shareholder, an activist fund with a 15% stake, supports a sale of the company. Previous acquisition offers for Ontex were reportedly in the range of €20-27 per share, though these were dismissed. Given current market conditions, an offer in the range of €16-21 could be expected if a private equity acquisition were to proceed. Competitive Landscape and Risk Factors Despite growth potential in the U.S., Ontex faces competitive pressure in Europe, where low-cost discounters have placed margins under strain, affecting even large consumer brands like Nestlé and Unilever. While the U.S. market remains more resilient, any increase in price sensitivity or competition from domestic white-label manufacturers could impact Ontex’s long-term growth in this region. Investment Summary Ontex presents a potentially attractive investment due to: * Upside Potential: Undervalued shares and the possibility of a buyout at a premium. * Stable Revenue Base: Consistent demand for diapers, particularly through white-label products. * Strong Management Incentives: Board members are heavily incentivized to increase the share price. * Growth in the U.S. Market: Opportunities in an underserved segment with rising consumer demand for white-label products. However, risks include economic pressures in Europe, competitive dynamics from discounters, and potential volatility due to activist investor involvement. Investors considering Ontex may benefit from a cost-averaging strategy during market fluctuations to secure a favorable entry price. Final statement I am personally anticipating a potential acquisition by a private equity firm. An offer in the range of $22–$23 per share would represent approximately triple the current share price.
EURONEXT:ONTEXLong
by marc_kober
The pearl of the aviation/defense industry: Dassault AviationOverview In this report, we analyze an undervalued and lesser-known stock in the aerospace and defense sector. While many investors focus on established giants like Rheinmetall and Lockheed Martin, this gem offers a compelling opportunity due to its unique market positioning, low valuation relative to peers, and multiple growth drivers. The geopolitical climate, recovering business jet demand, and strategic stakes in adjacent industries create a favorable investment case. Key Investment Highlights 1. Market Position and Peer Comparison: o The company is undervalued compared to its peer group. Despite operating in the high-demand aerospace and defense sector, it trades at a lower Enterprise Value-to-EBITDA multiple and offers a lower next-12-month Price-to-Earnings (P/E) ratio than major competitors like Boeing. o Strategic stakes in other companies, such as a substantial 25.85% holding in Thales SA, significantly contribute to its intrinsic value, while also benefiting from cross-sector synergies. 2. Product Line and Market Potential: o The company manufactures both military and business aircraft, including the Rafale series of combat jets and the Falcon business jet series. The business jet market, which operates as a near-oligopoly, includes only a few competitors like Gulfstream and Bombardier, creating a strong market niche. o Business jets and their related service revenues account for 25% of the company's income. This sector's high margins and steady demand from affluent customers, largely resilient to economic cycles, provide additional stability to the revenue base. 3. Global Geopolitical Tailwinds: o The ongoing increase in military budgets worldwide, driven by geopolitical tensions involving Russia, Ukraine, Israel, and China, will likely lead to long-term, robust demand for defense equipment. o Many NATO countries, particularly in Europe, are increasing their military spending to meet target levels, offering an anticipated tailwind for this company’s defense segment. 4. Business Jet Market Recovery: o Since the COVID-19 pandemic, demand for business jets has rebounded, with significant growth potential in Asia. The company recently launched the Falcon 6X and Falcon 10X business jet models, addressing the aging fleet in the market, with an average fleet age of 18 years. o Increasing wealth in Asia, with hundreds of new millionaires emerging daily, suggests a positive growth outlook for luxury and business jet demand. 5. Stable Revenue from Services and Maintenance: o The aerospace sector typically experiences steady income from maintenance services, essential for keeping aircraft operational. The demand for private jet maintenance remains high, even during economic downturns, especially among high-net-worth individuals. o This focus on service revenue translates into predictable free cash flow, a record-high order book, and strong long-term visibility. Financial and Valuation Analysis • Valuation Metrics: The company trades at approximately 9.2 times the P/E ratio and 4 times EBITDA, considerably lower than the broader peer group average. This valuation reflects a significant discount, particularly given the company’s promising outlook and high industry relevance. • Ownership and Management: The company’s majority ownership by a prominent French family (Dassault Family), holding 66.11% of shares (Groupe Industriel Marcel Dassault), indicates a potential alignment with shareholder interests, bolstering stability and strategic direction. • Stock Buybacks: The company has consistently executed share buybacks, repurchasing over 20% of outstanding shares since 2015 at favorable valuations, further enhancing shareholder value. Long-Term Growth Catalysts 1. Military Budget Increases: Rising global defense budgets due to heightened geopolitical risks create a favorable environment for sustained defense spending. 2. Wealth Growth in Asia: Rapid economic growth in Asia supports a steady increase in demand for business jets, reinforcing the company’s prospects in this niche. 3. New Product Launches: The introduction of the Falcon 6X and 10X models targets the luxury business jet market, where the replacement cycle and market demand are aligned for growth. Ethical Considerations This investment opportunity, while financially compelling, is situated in the defense sector. Investors should consider their stance on ethical investing, as a portion of the company’s revenue is derived from military products. Conclusion The stock represents a strong value opportunity within the aerospace and defense sector, bolstered by its underappreciated valuation, diverse revenue streams, and high-growth market segments. With long-term tailwinds in place, this company has the potential to deliver attractive returns as it continues to capitalize on both military and business aviation demand. It’s important to keep in mind that if Trump wins and manages to ease the current political tensions (though it’s uncertain if he will), this stock may become less appealing. This information is for informational purposes only and does not constitute financial or investment advice. Always do your own research or consult a financial professional before making investment decisions.
EURONEXT:AMLong
by marc_kober