Positioned on the theme of energy transition, which is very popular with investors, this world leader in energy management enjoys tremendous visibility. The valuation bonus is deserved and the file can be played by means of a turbo call.
Already integrated into the letter’s French equity portfolio, Schneider Electric is an issue that we appreciate. Both for its positioning on the theme of sustainable development and for its strategy to develop a software offering to automate and manage electrical energy remotely and thus save money. The model is recurring, profitable and offers visibility. After a first half logically penalized in the second quarter by the global economy being sealed off, the world leader in energy management resumed in the third quarter with organic growth of 1.3% in its turnover. business. Despite the lack of visibility linked to the health crisis, it even allowed itself to raise its objectives for the last fiscal year in October, counting on a slight erosion of 0.2 point, or even a slight improvement in its expected adjusted current operating margin between 15.1% and 15.4% despite an anticipated decrease of around 5% to 7% in billings. The pandemic does not call into question the longer-term ambitions of increasing profitability to 17% by 2022. Little debt with a net debt limited to 21% of shareholders’ equity, generating significant net cash flows ( 2.8 billion euros in 2020) and with visibility on the trajectory of growth and profitability, Schneider Electric ticks all the boxes of a very high quality case.
6.37 times leverage
Trumps far from being given at 24.5 and 21.5 times the profits for 2021 and 2022 but the title is far from having exhausted its potential. This can be played with leverage by means of a turbo call issued by BNP-Paribas with no expiry date and with a security threshold set at 105 euros that the share must not break down under penalty of seeing the certificate lose. full value. The difference with the current prices is important and therefore offers sufficient time to unwind the position in the event of an unfavorable evolution of the title. Meanwhile, the turbo has an attractive leverage of 6.37 times. Thus in the event of a continuation of the Schneider Electric share at 135 euros for example, the call will appreciate by 48.5%. But conversely, it will lose 50.4% of its value if the title ebbs to 115 euros.
Our advice: buy a Schneider Electric call issued by BNP-Paribas (code: FRBNPP023P81); term: unlimited; funding level and security threshold: 105 euros; parity: 10 certificates for 1 share; price: 2.02 euros; portion: 1.