Ence and Viscofan, Berenberg's favorite Spaniards

Two Spanish stocks are included in Berenberg's list of favorites to invest, within the universe of medium-sized companies, after adding five new stocks, including the textile rental company Elis, the Italian technology company SECO and the service provider specialized in Spie energy.

Viscofan stands out for the resilience of its business and its attractive and sustainable dividend yield of 4% in an uncertain environment such as the current one. Yesterday it rose 0.89%, to 56.40 euros, close to the year's record set in August at 57.60 euros. For the German bank, it has a range of up to 70 euros, 24% above yesterday's close.

The world market leader in artificial casings for food offers growth in market share and revenue. Analysts note that the company has weathered previous downturns, such as the financial crisis, and has increased its dividend every year for more than two decades.

"As a result of the strong volume growth recorded in the first half, coupled with the 9% price increases already announced, we expect the second half to be very strong, with rising product prices," the report said.

Ence, the leading European producer of eucalyptus pulp and the largest producer of biomass energy in Spain, is trading close to its record for the year (3.76 euros on August 18) and Berenberg gives it a range of up to 4.65 euros (yesterday it closed at 3.46 euros). Experts point out that the pulp and electricity businesses provide it with a solid operating environment, with prices at all-time highs.

The company has a strong pipeline of new biomass plant growth and is an ESG leader, with the highest Sustainalytics score in the pulp and power sector.

Despite these positive aspects, problems at one of its plants (Pontevedra) have depressed sentiment and valuation.

The action has three reasons that could boost its price in the coming months:

1. The Supreme Court will rule on October 4 on Ence's appeal regarding the plant in dispute and the result will be announced in the fourth quarter. Analysts are increasingly positive.

2. On October 25, a biomass auction has been called to trigger the profits of its partner Ancala and allow Ence to deploy part of its biomass portfolio.

3. Pulp prices could hold steady at all-time highs or even rise, and its counterpart Altri has commented that he believes there is more risk of higher pulp prices. For this reason, Berenberg believes that Ence's shares are trading cheap.

other opportunities

Also new to the list of favorites is the French Elis, the main textile rental company in Europe and Latin America. Economies of scale, an efficient network of plants and optimized logistics have allowed it to obtain the best margins. In its favor is that it is a company with proven pricing power, according to Berenberg.

The firm also highlights the Italian technology company SECO, since its listing does not take into account its evolution towards higher value-added products, the potential of the software services business and its purchasing strategy that will bring out value.

The position of the French Spie as a facilitator of the energy transition will make it benefit from the greater commitment of governments as part of the European green agreement, as well as from the investments of companies to reduce their environmental footprint.

These five values ​​join three others that remain on the list of favorites: the Italian Interpump, the French Korian and the Belgian Barco. They are securities from different sectors that are listed at attractive prices and that offer an upward path between 22% and 142%.