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Looking For Quality In Europe - Three Businesses To Consider

Jun. 14, 2020 1:50 PM ETASBFY, HEINY, SMFKY1 Comment


  • Three family-owned businesses with long history and leading position in their respective fields.
  • Each of the three having unique competitive advantages driving above peer average return on capital.
  • Stable and high quality earnings with significant exposure to the FMCG sector.

Source: inc.com

What's do these three businesses have in common

The three businesses analysed here are of the highest quality within their respective industries. Each one of them have unique and sustainable competitive advantages that allows for above industry average return on capital. Thus as long as valuations are not prohibitively high each one of them makes for a compelling long-term investment opportunity.

All three are also mainly focused on Europe and although they can be described as global companies their main geographical exposure remains in Continental Europe and the United Kingdom.

This makes them good fit for investors seeking high quality companies outside of the U.S., which is now one of the highest valued equity markets.

Source: starcapital.de

The three companies are also family-owned and with a very long history within their respective fields. As such they are more likely to benefit long-term oriented shareholders, as family controlled businesses are often run with next generations in mind which often leads to long-term value creating decisions being favoured over short-term ones.

The most international beer brand

Source: theheinekencompany.com

Heineken is arguably the most international beer brand with more than 150 years of history.

The story of Heineken really began on February 15, 1864, when Gerard Adriaan Heineken took over the Haystack brewery in Amsterdam. Just 22 years old, Gerard had little brewing experience, but he had plenty of courage, self-confidence and entrepreneurial spirit.

Source: theheinekencompany.com

The company also owns a portfolio of strong regional and global brands, such as Amstel, Sol, Tiger, Dos Equis, Birra Moretti and Red Stripe.

As beer consumption suffered during the pandemic lockdowns, Heineken (OTCQX:HEINY) share price fell more than 30% from its February highs. As I wrote back in April, this drop represented a good opportunity for long-term investors to jump

This article was written by

Vladimir Dimitrov, CFA profile picture
Investment strategy for those seeking steady and above-market returns

Vladimir Dimitrov is a former strategy consultant with a professional focus on business and intangible assets valuation. His professional background lies in solving complex business problems through the lens of overall business strategy and various valuation and financial modelling techniques.

Vladimir has also been exploring the concept of value investing and in particular finding companies with sustainable competitive advantages that also trade below their intrinsic value. He supplements his bottom-up approach with a more holistic view of the markets through factor investing techniques.

Vladimir made his first investment in farmland right out of high school in 2007 and consequently started investing through mutual funds at the bottom of the market in 2009. In the years that followed he has been focused on developing his own investment philosophy and has been managing a concentrated equity portfolio since 2016. Vladimir is LSE Alumni and a CFA charterholder . 

All of Vladimir's content published on Seeking Alpha is for informational purposes only and should not be construed as investment advice. Always consult a licensed investment professional before making investment decisions.

Analyst’s Disclosure: I am/we are long ASBFY, HKHHF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Please do your own due diligence and consult with your financial advisor, if you have one, before making any investment decisions. The author is not acting in an investment adviser capacity. The author's opinions expressed herein address only select aspects of potential investment in securities of the companies mentioned and cannot be a substitute for comprehensive investment analysis. The author recommends that potential and existing investors conduct thorough investment research of their own, including detailed review of the companies' SEC filings. Any opinions or estimates constitute the author's best judgment as of the date of publication, and are subject to change without notice.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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