Bright Future Ahead? 2 Eurozone Stocks With Encouraging Sales Trends

|
 |  Includes: CLB, NXPI
by: Kapitall

Summary

The eurozone is expected to see increased growth for 2014.

French and German economies are expected to remain flat, however.

Looking for companies with faster revenue growth than inventory growth may be a clue to outperforming profitability.

The 18-member eurozone will see an uptick in growth in the coming months, according to the latest readings from the Organization for Economic Cooperation and Development (OECD). The OECD's May composite leading indicators (CLI) were published Tuesday and revealed that a rise in Italy's leading indicators will push the currency union toward faster growth in the next six months.

Growth in France and Germany, the two largest economies in the eurozone, is expected to remain flat. Similarly, Canada, Japan, the UK, and the US will remain on pace. India's growth is also classified as stable, making it the sole BRIC nation not projected to experience a slowdown in growth later this year.

The OECD's CLIs are used to determine shifts in economic activity six to nine months before they happen. To do this, the OECD compiles and analyzes indicators related to business confidence, changes in orders and inventory, financial market indicators, and key sector and trading partner data among smaller open economies. That's why we decided to look at sales trends - inventory and accounts receivable - among eurozone stocks for our following screen.

We began with a universe of stocks headquartered in any of the 18 eurozone economies and subsequently screened for stocks with faster growth in revenue than accounts receivable year-over-year and a decrease in the portion of current assets attributable to accounts receivable during the same period.

Then we screened that group for stocks also experiencing faster growth in revenue than inventory year-over-year and a decrease in the portion of current assets attributable to inventory.

Click here to see the full, interactive chart.

1. Core Laboratories NV (CLB, Kapitall snapshot): Provides reservoir description, production enhancement, and reservoir management products and services to the oil and gas industry worldwide. Market cap at $7.50B, most recent closing price at $162.78.

Revenue grew by 8.58% during the most recent quarter ($276.28M vs. $254.46M y/y).

Accounts receivable grew by 1.92% during the same time period ($206.62M vs. $202.72M y/y). Receivables, as a percentage of current assets, decreased from 68.28% to 68% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

Inventory grew by -4.97% during the same time period ($46.82M vs. $49.27M y/y). Inventory, as a percentage of current assets, decreased from 16.59% to 15.41% during the most recent quarter (comparing 3 months ending 2013-12-31 to 3 months ending 2012-12-31).

The company is based in Amsterdam, Netherlands.

2. NXP Semiconductors NV (NXPI, Kapitall snapshot): Provides mixed signal solutions and semiconductor components primarily in Japan, Europe, South Korea, Rest of Asia Pacific, and the Americas. Market cap at $15.76B, most recent closing price at $60.69.

Revenue grew by 15.86% during the most recent quarter ($1,293M vs. $1,116M y/y).

Accounts receivable grew by 6.27% during the same time period ($542M vs. $510M y/y). Receivables, as a percentage of current assets, decreased from 26.1% to 25.91% during the most recent quarter (comparing 13 weeks ending 2013-12-31 to 13 weeks ending 2012-12-31).

Inventory grew by 3.5% during the same time period ($740M vs. $715M y/y). Inventory, as a percentage of current assets, decreased from 36.59% to 35.37% during the most recent quarter (comparing 13 weeks ending 2013-12-31 to 13 weeks ending 2012-12-31).

The company is based in Eindhoven, Netherlands.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure: Kapitall is a team of analysts. This article was written by Mary-Lynn Cesar, one of our writers. We did not receive compensation for this article (other than from Seeking Alpha), and we have no business relationship with any company whose stock is mentioned in this article.