Europe's best deal right now? My stock buy of the week

Monopoly-like, 93% ROIC, 96% margin, 15x forward PE

Hi all.

This week, France was on my mind.

I’ve been watching LVMH (MC) fall into attractive territory, and came close to buying.

But there’s another French company killing it.

So much so, I can wonder if it’s Europe’s best investment opportunity right now.

Summary

• Gaztransport & Technigaz SA (GTT)

• Amazing financials = yes

• Reasonable price = yes

• Wide moat = seems like it

• Best deal right now in Europe?

Read on.

Blink and you miss it

The biggest knock against Gaztransport & Technigaz is its recent price performance.

Up 25% YTD and 15% the past month.

This isn’t how I roll.

I don’t usually buy surging companies when they’re surging.

I do the opposite.

I go for companies like Novo Nordisk - down 50% the past year.

Great companies with pricing power - dropping too far.

But nowadays, it's like everything is climbing. Novo is up 5% this week and 14% the past month.

Looking for value this week, I came close to buying more Höegh Autoliners (HAUTO) on Friday.

But then it rose 8% before I put in my order.

Right now, you blink and miss 8%.

GTT vs. LVMH?

So markets are still bubbling.

Which is one reason I'm keeping a close eye on LVMH.

While everything else is up, it’s down.

About 40% the past year and 25% YTD.

I like LVMH. Its size, history and pricing power. I can see buying it soon.

But I noticed - despite the steep decline - it’s still a bit more expensive than GTT.

And GTT has way better financials.

Financials?

Start with return on capital and assets.

We all love ROIC and ROA.

In Finchat, when I screen for 50% ROIC and 40% ROA - and rank by market cap - it’s no surprise to find Nvidia (NVDA) coming in at the top.

Then, leading in Europe are a couple UK companies - Rightmove (RMV) and Games Workshop Group (GAW).

And then soon after that you see GTT.

With its current ROIC of 93% and ROA of 47%.

Looking closer at GTT, you find several more things to like:

• 96% gross margin

• 47% FCF

• 75% 5-year ROIC

• No debt

• EV below market cap

• 27% three-year revenue growth

• 50% revenue growth last year

Fantastic.

So, great financials = check.

Price?

There are of course a lot of things to like about NVDA, RMV and GAW too.

So then I look at price.

Nvidia is at a trailing PE of 45x and forward PE of 29x.

Very high.

Rightmove and Games Workshop have trailing and forward PEs around 26-30x.

Also high.

And you can even look at another high-ROIC French company - Hermes (RMS) - and see its PEs in the 50s.

Sky-high.

Meanwhile, GTT has a trailing PE at 18x and forward PE at 15x.

So, attractive price = check.

Moat?

And then there’s the question of durability.

Durable competitive advantage. Or moat. How durable is all this for GTT?

You never know for sure. But by the looks of it, it seems pretty durable.

Because GTT is a:

• highly advanced and specialized niche player (making cryogenic membrane containment systems)

• with a dominant, monopoly-like market share seen at some 80-90%

• and heavily patented intellectual property rights

• with a long track record (started in 1963)

• in a growing liquefied natural gas (LNG) transport and storage industry

• which is high-value and safety-critical (you don’t mess around with LNG)

• and has high barriers to entry (complex and regulated)

• and customer stickiness (like high switching costs)

So, potential moat = a strong maybe.

Europe’s best deal?

Put all these together:

• the financials

• the price

• the potential moat

And you may have one of Europe’s best deals on offer right now.

Contain myself

I see big things ahead for GTT, this LNG container company.

So I bought a bit this week (EUR 169) and added it to my fund.

But I admit it - I don’t love my timing here:

• GTT has already been climbing

• the LNG market is cyclical

• and it looks like it’s already well into an upcycle

Buying at the top of a cycle is not something I usually want to do.

But looking at GTT’s numbers and market position, I couldn’t contain myself.

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Thanks for reading. We’ll see how it goes. Talk to you next week.

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Hi, I’m Joel. I invest each week and write about what I buy, learn and earn. I’m a former financial journalist for Dow Jones and The Wall Street Journal. And a current bank employee. I live in Stockholm, Sweden and started the Sherwood Investment Letter in January 2025. Purchases are not recommendations.

Subscribe. I’d love to have you along for the ride.

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Fund holdings & performance:

Nvidia +19%

Pandora +15%

Aker BP +12%

Novo Nordisk +6%

Dedicare +5%

Equinor +2%

Adobe +1%

Investor AB 0%

Höegh 0%

Gaztransport & Technigaz -1%

Viva Wine Group -2%

Wallenius -2%