In 2022, the prices of goods and services have risen worldwide at one of the highest rates in decades. In fact, in September 2022, the annual inflation rate in the euro area was 10%, the highest level recorded year on year for over 30 years. The Covid-19 pandemic and the Russia-Ukraine conflict are among the main causes of this sudden increase in prices. These events have contributed to creating difficulties in supply chains and energy supply globally, resulting in an increase in energy and production costs.
Despite the restrictive maneuvers implemented by central banks, inflation seems destined to remain with us. In fact, Bloomberg’s estimates for the fourth quarter of next year also remain well above the 2% target theorized by central bankers both in the United States (where the forecast is 3%) and in the Eurozone (3.3% consensus). According to analysts, any future signs of a breach of the inflation peak could lead to a change in the direction of monetary policy and improve market sentiment.
In this context, it is necessary to have an active approach to portfolio construction, which includes asset capable of playing defense with a focus on fundamentals. Companies with solid fundamentals are often in defensive sectors such as Consumer Goods (retail or consumer goods) less sensitive to changes in the economy or inflation. Companies with pricing power, such as those with strong brands, may be able to pass on the cost increase and preserve their profit margins.
Globally, producers of consumer goods are faced with continuous increases in operating and production costs, which they are passed on to retailers and end consumers. Despite this transfer of higher prices, the latest reports of European (such as Carrefour and L’Oréal) and American (such as Procter & Gamble) consumer goods producers show that, so far, they have successfully defended their respective market positions. .
New Memory Cash Collects that contribute to the reforestation of Italy
An alternative way to invest in the above securities is to use investment certificates like new ones Memory Cash Collect di BNP Paribas on baskets of Italian and foreign shares. Attractive tools for investors looking for returns (between 10% and 22.8% per annum) who want to expose themselves to the stock market with a medium-term time horizon (3 years), while benefiting from nominal capital protection also in the event of discounts of up to 50% of the underlyings thanks to the protection barrier observed only when the product expires.
Thanks to collaboration with Reforest’ActionBy investing in the new range, investors can contribute to the reforestation of the Italian territory without giving up the potential return typical of these instruments. In the first six months of the life of the certificates, i.e. from October 2022 to April 2023, BNP Paribas will calculate the total amount sold on the Italian Stock Exchange of the new Memory Cash Collect range and, for every thousand euros of capital invested, it will pay to Reforest’Action the equivalent needed to plant or care for a tree in a forest located in Italy.
Quarterly coupon of 28 euros for the certificate on Carrefour, L’Oréal and Procter & Gamble
Within the new range of certificates, listed on SeDeX (MTF), we find the Memory Cash Collect (ISIN NLBNPIT1HLF2) on the basket made up of Carrefour, L’Oréal and Procter & Gamble, which offers a quarterly bonus with memorandum effect of 28 euros (equal to 11.20% per annum). To collect the coupon it is sufficient that all shares in the basket are at or above the Barrier Premium level. In particular, this BNP Paribas issue is characterized by the coincidence between the value of the Premium Barrier and the value of the Expiry Barrier, and their particularly deep level, set for both up to 50% of the initial value of the underlyings.
Furthermore, starting from the second quarter, thememory effect which allows the investor to receive, on a valuation date, a cumulative premium comprising all previously unpaid premiums, if the conditions for receiving the premium are met on that valuation date. From the sixth month onwards, if on the quarterly valuation dates all the shares in the basket are quoted at a value equal to or greater than their respective initial value, the certificates expire prematurely. In this case, the investor receives, in addition to the quarterly premium and the nominal value (1000 euros), also any previously unpaid premiums.
If the certificates expire (6 October 2025), they are expected instead two possible scenarios. In the first case, if the price of all the shares is equal to or higher than the Barrier at Maturity level (50% of the initial value), the product reimburses the nominal value plus the premium with memorandum effect. Otherwise, if the price of at least one of the underlyings is less than 50% of the initial value, the certificate pays an amount commensurate with the performance of the worst share in the basket (resulting in partial or total loss of the capital invested).
The buys of the analysts on the shares of the basket flocked
The consensus on the three titles of the basket collected by Bloomberg, which we report in the table above, is substantially positive. Almost all analysts recommend buying on Carrefour and Procter & Gamble with a small minority suggesting to sell. On L’Oréal it prevails among analysts to keep the shares in the portfolio (hold), but even here the buy opinions exceed the sells. Furthermore, the 12-month average target price indicates that these stocks are currently under-priced and from which analysts expect major upside. This makes these underlyings suitable for strategies with investment certificates, or for those with a lateral or moderately bullish view in the medium and long term.
WARNING
This publication has been prepared by T-Finance business unit of T-Mediahouse Srl (the Publisher), with registered office in Viale Sarca, 336 (building sixteen), 20126, Milan, in complete autonomy and therefore reflects only the opinions and the Editor’s evaluations. The information and opinions contained in this publication have been obtained or extracted from sources believed to be reliable by the Publisher; however, the Publisher makes no representations or warranties as to their accuracy, adequacy or completeness. BNP Paribas and the companies of the BNP Paribas group do not accept any liability for its content. Scenarios, calculation assumptions, past data and performance, estimated prices, examples of potential revenues or valuations are for illustrative / informational purposes only, with no guarantee that such scenarios or potential revenues will occur or be achieved. In any case, the Publisher is not responsible for any loss or damage, direct or indirect, which may derive from the use of the contents of this publication.
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