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A Colruyt supermarket depot at the height of the pandemic in March
Getty Images
Since Barron’s last screened the
Stoxx 600
index for second-wave proof stocks with growth prospects, Europe—once the epicenter of the virus—has seen cases rise again in a number of countries.
Global coronavirus cases hit 25 million earlier this week, while the U.S. reached 6 million cases and infections continued to rise in hot spots such as Brazil and India. Cases in Spain, one of Europe’s worst-hit countries in the initial wave of the virus, as well as France have risen sharply in recent weeks. With children heading back to school, workers returning to the office, and fall around the corner, now may be a good time to prepare your portfolio for a potential second spike.
To find European stocks well-placed to weather a second wave of Covid-19 and likely to grow in the years ahead, Barron’s screened for stocks that emerged from the first wave without too much damage: less than a 15% drop between Feb. 19 and March 23. A 15% fall, as experienced by
Unilever,
may sound steep but it puts the stock in the top 7.5% of performers in the Stoxx 600 over that period.
The companies must also be in the green from March 23 to date, eliminating stocks that benefited during the crisis and have fallen back since. The final metric requires companies to trade at no more than 25 times forward earnings estimates.
Data as of Sept. 3
Source: FactSet
Belgian retail corporation
Etablissementen Franz Colruyt
(ticker: COLR.Belgium), also known as Colruyt Group, entered the screen after a strong share price performance last month. The retailer’s stock climbed close to 7% in August, meaning it is now up 8.7% since March 23. The company, best known for its discount supermarket chain Colruyt, showed its resilience at the height of the pandemic when the stock rose 6.8% during the market’s rout.
Colruyt’s revenue rose 1.6% to €9.6 billion ($11.4 billion) for the full year to the end of March as the Covid-19 crisis and global lockdown measures boosted sales. However, the company revealed in June it had lost market share after years of gains, sending the stock lower.
Dutch multinational
Royal Vopak
(VPK.Amsterdam), which provides tank storage for oil, gas and chemicals, narrowly avoided falling off the list after its share price dipped in August, below pandemic levels. However, a rally on Wednesday and Thursday sent the company’s stock higher. The largest independent oil storage company said at the end of July its oil capacity was almost fully booked amid a global collapse in demand. The company, which has battled to reduce costs during the pandemic, reported a net profit rise in the second quarter but earnings fell short of analysts’ expectations due to project delays.
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