May 26, 2024

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Buying List 2023: Peter Paul de Vries

Buying List 2023: Peter Paul de Vries

In a few hours we will be calling the New Year. Nine investment experts have nominated their favorite stocks for 2022 in recent years. We close the series with Peter Paul de Vries, CEO of investment firm Value8 and Chairman of the IEX Group Supervisory Board. He also has a surprising list.

With the AEX down more than 13%, looking back at stock market year 2022 is not an exhilarating activity for investors. “To some extent, this also applies to reconsidering my three tips for buying from the end of December 2021,” says Peter Paul de Vries.

The selection was then based on fundamentals. Two companies from which I clearly expected better results than the consensus (renewal And the Heijmans) as well as the fast-growing Chinese tech giant Tencent Through it Nasper(Prosus’ parent company) at half the price.”

Making adjustments — in matters such as the war in Ukraine, rising inflation, interest and additional nitrogen measures by the government — is not possible with annual ex gratia. The trio stood firm.

Heijmans and Renewi’s good running results were not rewarded

Against this backdrop, the three tips are not doing badly in 2022, de Vries says. “Renewi actually did better. The recycling group raised its forecast twice last year and ultimately came in at 98 cents per share, much more than the 60 cents analysts had in mind.”

However, the price has dropped from €8.93 to €6.80: a decrease of 24%. “Renue goes through the classic process of transformation, from excessive pessimism (share price at €2) step by step to normal valuation in line with the market,” says de Vries. According to him, this already justifies the price of more than 10 euros.

“In the third stage, the premium is due to the sustainable nature of the activities. Recycling makes a huge contribution to a sustainable economy, and Renewi is already able to reuse two-thirds of the waste. With a sustainability premium, a Renewi course can be on a platform from €15 to €20 for a few Years “.

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De Vries has some regrets about the second in line, Heijmans. “Heijmans has enough trump cards: a low valuation, good management, cabinet-house ambition, a good return. But it doesn’t meet my growth requirements: a company that will have much more sales and profits in five years from now. According to him, I should Buffett is an investor that ignores construction companies.

He noted that Heijmans’ figures were excellent: the builder reported earnings per share of €1.31 in the first half of 2022, compared to €43 cents a year earlier. However, these good numbers have been rewarded by a price drop from €14.90 to €10.20. “The pain has been eased somewhat by a dividend of €0.88, but with an annual loss of 25% Heijmans remains underperforming,” says de Vries. The share is now even cheaper than last year. “But now there are shares of established growers that are valued more attractively,” de Vries says.

…but Naspers in addition thanks to the final sprint

That leads De Vries to his latest tip for 2022: Naspers, the South African parent company of Prosus. “Naspers has a bigger discount than Prosus, the (indirect) interest in Tencent is much more valuable than the whole of Naspers,” de Vries explains.

For much of 2022, the Chinese stock market has been in the corner where the blows fell. But with the easing of corona measures, recovery has begun. Naspers ends 2022 above last year’s end: price rose from $31 to $33.58, which is more than 8.3%. “Including the dollar increase (+6.5%), we reached a yield of more than 15%.”

The overall performance of the trio (-11.5%) is poor, says de Vries. “Every reason to be more selective about choosing 2023 and to be more true to Buffett’s ideology.”

2023 Winners: Recycling and 2 times Technology

That leads the CEO of Value8 to advice for 2023. “The economic picture for 2023 is not at all sunny,” he says. “It looks like 2023 is going to be a year – again – of very high inflation, high interest rates and a cold economy. And give Poinradar a score of 4 or 5 for that.”

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“It is clear that the Fed is raising interest rates faster than the European Central Bank. After all, the ECB’s room is limited, because Italy can no longer afford interest costs at higher interest rates. Against this background, I expect the dollar to be stronger.” of the euro.

After a major correction in 2022, De Vries assumes a normal performance of +7 to +9% for stocks. For AEX, this means a final score of 750 to 770 points.

For his three buying tips, he chooses companies that have the potential for further revenue and profit growth in 2023 and beyond.

1. The sustainable renewal program deserves reclassification

renewal Still on De Vries’ buy list. “The company is well managed, there is a lot of potential for earnings growth and the valuation is still very low. The long-term shareholder keeps this stake. Earnings per share should be 80 to 90 euro cents, which is justified by 10 euros in the long run, can The share is much higher.

2. BESI focuses on hybrid bonding

Number Two BV Semiconductor Industries (PC). “The question of whether BESI is a growth company or a cyclical company has now been answered. BESI is growing rapidly in terms of direction, although it does not go in a smooth line. After a good period, it is usually followed by six weaker quarters. There are already three or four from behind.”

According to De Vries, BESI has enough assets: turnover potential of more than €1 billion and hybrid bonds could gain momentum in 2023. The company combines this into a generous yield and a solid balance sheet. In the long term, the profit can reach 5€ to 6€ per share, the vast majority of which will be paid out as dividends. It has not yet been priced at 57 euros.

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3. Alphabet: A very cheap farmer

The number three is the alphabet. “In 2022, technology is outdated. The standard explanation for this is that tech companies’ profits lie farther into the future. Higher interest rates lower the present value of those cash flows. In my opinion, the tech correction has basically been following ridiculous valuations of 20 times turnover or more.” “From 100 times earnings to promising tech companies. Promising, but disconnected from reality. For those funds, 2022 was a well-deserved cold shower.”

This correction of technical assessments also provides opportunities, de Vries says. For example, Alphabet is trading at 16 times 2023 earnings. The enterprise value is only 11 times its operating result. While Alphabet is a company with great market positions, it has plenty of growth potential and a strong balance sheet that provides room for share buybacks. “.

He finds it incomprehensible that Alphabet trades at a lower valuation than the “Akzo Nobel” or IMCD. “With these three tips for buying, I start the new year. And I have complete confidence in this.”

The three purchase tips are done in your personal capacity. De Vries retains – directly and indirectly – interest in the three tipping stocks. Value8 has a significant investment in Renewi. For this, Value8 plugging is indicated.

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