|
BUSINESSWEEK ONLINE: DAILY BRIEFING | |||||||||||
| |||||||||||
|
BW ONLINE DAILY BRIEFING |
 | |
 | |
 |
||||||
Where Some of Europe's Hottest Growth Stocks Are Hiding German fund manager Anthony Parker has his eye on a few -- and they're not on Germany's sizzling Neuer Markt Oddly enough for a fund manager working for a German bank, Anthony Parker doesn't much like German stocks right now. The reason? Parker, who specializes in picking European growth stocks for Dresdner's RCM International Asset Management arm in London, thinks Germany's red-hot Neuer Markt is overvalued and too driven by fickle retail investors who are into short-term speculation. Parker's opinion on the matter should carry weight: The $35 million European Special Fund he manages is up 23.3% (measured in pounds sterling) since he took it over in late 1996. Rather than pour money into the Frankfurt-based Neuer Markt, Parker prefers to seek out bargains in less well known markets around the Continent. The Neuer Markt may be the biggest, fastest-moving growth stock market in Europe, having exploded to nearly 150 listed companies in just two years of existence. But Parker thinks there are better values on markets like France's Nouveau Marche. "I have zero invested in the Neuer Markt," Parker says. The French market has more than 100 listed companies but has a total market capitalization of only about one-tenth that of the $50 billion Neuer Markt. Parker terms the Nouveau Marche "underresearched and undervalued" -- which is to say ideal terrain for bargain hunters. The index of all Nouveau Marche stocks, for instance, is off 3.5% this year. By contrast, the Euro NM 50, an index that consists mainly of the biggest Neuer Markt stocks, is up 8% so far this year. One caveat: European growth stocks, which trade on smaller exchanges, are widely available to European investors. But they're too small to have American Depository Receipts and tend to be very difficult for individual American investors looking to buy small lots. LET'S TALK. That said, some of Parker's top Nouveau Marche picks are truly tantalizing. One of his favorites right now is Genesys (www.genesys.com), an outfit based in Montpelier, France, that claims to be the European and Asian leader in videoconferencing. It also has been rapidly buying up U.S. rivals, including the teleconferencing unit of Denver's Williams Communication and the U.S. teleconferencing unit of Britain's Cable & Wireless. Genesys now says it's No. 3 in the U.S. in teleconferencing. And it raised $27 million with a convertible bond issue in late July to fund expansion. Shares are up 25% this year to about $15.50 (14.40 euros), but Parker figures that may just be the beginning of the climb. Fueled by the acquisitions, Genesys' growth has been spectacular. The company figures sales will hit about $50 million this year, up around 150% from 1998. Its forte: producing automated, operatorless conferences. Its record has earned it a raft of stellar clients, including France Telecom, British Telecom, and others. It also is moving into Web-based videoconferencing, a big growth area. Parker believes all that could keep the company's growth booming. Another French high-tech company on Parker's list is Duran Duboi (www.duran-duboi.com). Based in Issy les Moulineaux near Paris, it's the European leader in movie special effects. And unlike many hot-growth companies, it's earning money: $1.2 million on sales of $29 million in its most recent fiscal year. One thing that makes Duran Duboi a hot pick is a system called Mendel it developed that can do inexpensive 3D graphics for TV programs and for Web sites. Duran Duboi's shares have soared 49.5%, to nearly $109 (101.5 euros), partly because of Mendel's promise. Parker worries that other companies may be developing similar technology but still thinks the stock has great potential. That's partly because comparable TV and entertainment stocks on Germany's Neuer Markt trade at far higher multiples of sales and earnings than Duran Duboi. TRAGIC TURN. Parker's favorite low-tech pick of the moment, Serp Recyclage (www.serp-sa.com), is a company that suffered a terrible tragedy when CEO Jean Sorbier was killed in a car accident on June 5. Serp shares, which had hit an all-time high of $182 (170 euros) two days earlier, plunged. At $132.50 now, they're still off 27% from that peak, even though Serp, which is based in Sacy Legrand, France, has been highly successful with its plastics recycling business in its home market and is now going pan European. Parker thinks the shares will come back. Jean Sorbier's brother Jacques quickly took over the CEO job, and the rest of the management team remains intact. Serp is also quite profitable: Its net earnings were up 93% last year, to $2.8 millon, on sales that jumped 87.2%, to $13.4 million. Parker thinks Jacques Sorbier and his team have kept the company on track and have a good chance of succeeding in their expansion outside of France. "The size of the [plastics recycling] market is potentially enormous," he says. Parker, of course, doesn't restrict his buying to French stocks. Two other top picks right now are in Sweden. Linne Group recently merged with Cell Consulting Group to form Scandanavia's biggest Web consulting outfit. It has a list of blue-chip investors behind it, including Norwegian phone company Telenor, and plans to expand into the rest of Europe. Parker's other Swedish pick is GratisTel, a pioneer in free phone services (the catch being that advertising is played to the caller before or after the call). It's now marketing the concept to booming European mobile-phone operators such as Bougues Telecom in France. Parker's final pick is Pankl Racing Systems (www.pankl.com), an Austrian company that specializes in ultralight, high-performance engine, driveshaft, and suspension parts for Formula 1 and other race cars. Parker thinks Pankl's prospects are good because the auto racing business is booming. He bought the stock on EASDAQ, the Belgium-based growth-company stock market. But on June 16, Pankl also listed itself on the Neuer Markt. The lesson: The German market may indeed be overvalued, as Parker contends. But it's also getting to be so important that it's hard for a savvy growth-stock investor to avoid entirely. By Thane Peterson for BW Online
EDITED BY DOUGLAS HARBRECHT
_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ |
| |
 | |
 Assistive Technology barker.online Byte of the Apple Eye on Japan Hers.online Inside Wall Street Not-So-Neutral Corner Online Asia Power Lunch Privacy Matters Sector Scope Sound Money Street Wise Washington Watch News Flash Archive | ||||||
