Vinci SA (EPA: DG) is a French construction company, and one of the largest in the world by revenues. They are active in design and construction work in the fields of building, civil engineering, and hydraulics, as well as renovations and civil engineering projects. They also have a great presence in the management of areas such as public parking areas and European airports.
With this kind of a presence, and with almost half of its revenues coming from outside of France, 2015’s Q3 revenues were up 2.8% compared with the same period in the previous year. Overall, the first nine months of 2015 has seen the company report revenues of €28.2 billion. This was attributed to strong performances at their VINCI Autoroutes and VINCI airport divisions.
In a way, it’s obvious that the fall in oil prices determined people to travel more as fuel consumption & costs are less of an issue this year both for the auto and airline industry. What is surprising somehow, is the ability of Vinci to perform strongly outside of France when global growth is not doing so well.
Although the majority of their income is from outside of France, the European monetary policy plays an important role in what seems to be one of the greatest companies within Europe. A lower Euro helps with exports and whilst Vinci is not actually exporting physical products, it still benefits from gaining more contracts now that the Euro has been down for over a year and a half. The EURUSD rate is a great example of this as it has gone down to 1.10 from 1.40.
Looking at Vinci’s share price, the picture is really bullish in the sense that the company is sitting at an all-time high of around €60/share. With the ECB (European Central Bank) poised to cut the rates at the next meeting in December. This will be part of a plan to increase the size and pace of its bond-buying program. There seems to be an attractive scope to the upside for the medium period ahead of us, as more easing or stimulus should boost share prices. This makes Vinci a great candidate for a call option.
That being said, I am favoring a call option but with half the regular investment from the €60/share, and then I would double the investment if/when the price falls to €56-57/share as that is a good dip to be bought.
I would say the end of the year will find Vinci still at record highs, and therefore the expiration date is either one month for both call options or even the end of 2015 if your broker allows it.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
