Global Markets

Which of these IBEX 35 Stocks is a Safer Bet for Investors?

Story Highlights

Analysts are bullish on these two Spanish stocks. Which of these Buy-rated Spanish stocks is a better fit for investors’ portfolios?

Both Solar power company Solaria Energia y Medio Ambiente (ES:SLR) and steel manufacturer Acerinox (ES:ACX), have Buy recommendations from the analysts.

These companies have produced a strong set of results and are also positive on the outlook. Analysts have a bullish take on them. However, Acerinox seems to be a better choice, considering its strong growth prospects in the growing steel industry and its stable dividend growth.

Here, we have used the TipRanks Stock Comparison tool for the Spanish market to get a quick overview of these companies. This tool is the perfect guide for investors who are looking to choose a stock from any particular market and want to compare multiple stocks. Under this tool, the stocks can be compared on various parameters, such as analyst rating, target price, dividends, etc.

Let’s take a look at the details.

Solaria Energia y Medio Ambiente, S.A.

Solaria is a well-known name in the development of solar photovoltaic energy in Spain and other parts of Europe. The company is engaged in the manufacturing of solar panels and the management of solar plants.

Along with sustainability, the company’s main aim is to generate value for its shareholders. This is clearly visible in its share price, which has gained a whopping 680% in the last five years. This was driven by profitability and the growth in the solar sector over the last few years.

In terms of figures, the company’s 2022 nine-month results showed another outstanding performance. The total revenues of €121 million, which increased by 51% on a year-on-year basis, were driven by a 60% increase in electricity production. The net profits jumped by 86% to €69.7 million as the company implemented strict cost control measures.

Despite such numbers, the company has not announced a dividend recently and is not expected to do so in the near future either. The analysts feel the increasing debt remains a concern for the company. The company’s debt as of September 2022 was €771.1 million, up from €667 million in 2021.

Solaria Energia Stock Price Target

The stock enjoys a Moderate Buy rating on TipRanks. It includes three Buy, one Hold, and one Sell recommendations.

However, the average target price of €18.9 is 2.3% lower than the current price level.

Acerinox SA

Acerinox is among the largest manufacturers of stainless steel in the world. The company sells its products in more than 80 countries.

After a drop in steel demand during the pandemic, the demand and price for steel products have reached high levels, due to restored activities in the construction and automobile sectors. Later on, with the outbreak of war between Russia and Ukraine, steel prices again soared on supply issues. The industry is also facing short-term headwinds such as higher input costs and reduced demand in China.

Acerinox is right in the center of this and is witnessing higher demand for its products in the U.S. and Europe. The company posted a 47% increase in its sales of €6.9 billion for the first nine months of 2022. The earnings grew by 77% to €1.18 billion.

Post-results, the stock jumped by 23% in the last three months after having fallen by 18% in the last year.

Despite the uncertainties in market conditions, the company is consistent with its dividends due to its focus on a flexible capital allocation policy. In 2023, the company has proposed to allocate €150 million for dividends. The total dividend for 2022 was €0.40 per share, which is expected to increase by 20% to €0.60 in 2023.

Acerinox Share Price Forecast

According to TipRanks’ analyst consensus, Acerinox stock has a Moderate Buy rating.

The average price forecast is €11.40, which shows a change of 16.3% from the current price level. The target price has a high forecast of €13 and a low forecast of €10.1.

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Conclusion

Solaria’s stock has delivered 150% growth in the last three years; hence, analysts are not forecasting a huge jump in the share price in the near future. Also, the higher debt numbers make the dividend story a little difficult.

On the other hand, according to analysts, Acerinox’s share price has an upside potential of more than 15%, riding on higher sales and profits. The dividend yield is just icing on the cake.

Disclosure

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