Hanseatic Championship - Round 1, 6th

Quest for top equity investments

This is the 6th of 9 divisions of Round 1 and covers the industrial and material stocks of the "Turnaround" category:

1st: Solid Growth / Consumer (40) --> completed May 17
2nd: Solid Growth / Industrials & Materials (34) --> completed May 21
3rd: Solid Growth / Health Care (20) --> completed May 25
4th: Solid Growth / Technology (27) --> completed May 27
5th: Turnaround / Consumer & Technology (16) --> completed May 28
6th: Turnaround / Industrials & Materials (34) --> completed May 30, see below
7th: Highflyer / Consumer (17)
8th: Highflyer / Health Care (15)
9th: Highflyer / Industrials & Technology (35)

"Turnaround" stocks have to be evaluated differently from the “Solid Growth” category. We will not be employing our Growth/Valuation matrix, nor asking the two questions about momentum and margins. In order to qualify as a turnaround, a stock already has to show fundamental momentum and margin potential.

At this stage, the key questions for a turnaround case are:

How realistic is the rebound scenario expected by the consensus? Likely to extend beyond the 2021 corona-rebound? With what risks?
How much of that is already priced in?
Downside protection (net asset value) vs balance sheet risks?

For the following stocks, we can give positive responses to these questions, hence the winners of Round 1 “Turnaround/Industrials & Materials” are:

9 AMG AMG

10 Lanxess LXS

11 Sika SIKA

12 Continental CON

13 CTT Systems CTT

14 FLSmidth FLS

15 Jenoptik JEN

16 Kion Group KGX

17 Manz M5Z

18 Sandvik SAND

19 Schaltbau Holding SLT