Editor’s note: This article was first published in August 2012, and is a market snapshot from 7 August 2012, with the IBEX 35 at 7,211 points and year-to-date gains for companies such as Grifols, Inditex and DIA. Bankia was later absorbed by CaixaBank in 2021, and DIA went through a deep crisis from 2018.
In May we said that the IBEX 35 was scaring investors away because it was by far the worst-performing index in the world, having lost 21% so far this year. Yet since last week’s slump, in just a few sessions, our index has gained more than 13% and today stands at 7,211 points. With this rise, our index has become the best-performing in the world.
Just today a foreign investor told me, half-jokingly, that we Spaniards are too expressive about everything, even on the stock market, because we have no middle ground: either we trigger a 5% fall or a rise of the same size. And the truth is that it has been a long time since we saw two days in a row of moves between 0.20% and 0.70%. According to technical analysis, the IBEX’s primary trend is still bearish, and as long as it does not close above 7,220 points it would be hard to talk about a change of trend in Spain’s benchmark index. With no macroeconomic news due this week, the rises could well continue (unless some doom-monger speaks up, the risk premium shoots up and a sharp correction of the index begins all over again).
The IBEX 35 stocks that have performed best over this difficult year are:
- Grifols: Its shares have risen more than 77% so far this year, reaching €25.34. You could say it has been rising freely, with exemplary performance on the stock market, until someone recently advised selling despite the good results it presented, and it is currently going through a correction.
- Amadeus: Up more than 45% so far this year although, like Grifols, it has entered a correction. Some analysts believe this should not be given much importance, as the stock will stay bullish.
- Inditex: Up 40% for Amancio Ortega’s company. I must admit I was surprised to see it above €90 a share, since not long ago people called me crazy when I said its target price was €70. Still, be careful with Inditex’s free rise: a basic principle of the stock market is that everything that goes up comes down at some point, and at the levels Inditex is trading at, we don’t know how it would react to a correction. The experts say Inditex still has room to run. Personally, I would already be afraid to buy in above €90.
- Técnicas Reunidas: Another company that has returned 45% in 2012. It is a favourite of many analysts, who expect plenty of upside thanks to its strong international expansion and the contracts it has yet to sign.
- DIA: It is surprising that a supermarket chain has managed to multiply its revenue sevenfold in a global recession. DIA has returned 18% in 2012 and is still one of the stocks most recommended by analysts. One thing I have noticed about this stock is that it has hardly any volatility.
In other words, anyone who built their portfolio with these stocks has gained roughly 45% on average. The advantage of these shares is that they are not tied to swings in the Spanish market, which is why they do not usually lead the gains in strong rebounds. If the strong upward trend continues, as we have seen, the stocks that tend to rise most sharply are the ones hit hardest this year: Sacyr, Mapfre, Gamesa, Repsol and, of course, the standout Bankia, which has already returned more than 100% since it fell to €0.50 a share, trading above one euro again, although still far from the more than €3 at which it floated.
That said, although we always say that the stock market is a very profitable investment in the long term, for now, if you invest, do it with the very short term in mind, and we will see how the situation develops.
Further reading
Featured image: Gunnar Eberlein, Public domain, via Wikimedia Commons.
