April 13, 2023

Sto: Well positioned and sustainable European construction materials

Sto: Well positioned and sustainable European construction materials

This week we report on another stock selection for our Europe Value Wikifolio. The guests of the Obermatt Zoom Coffee Break stock discussion talked about construction material companies, and Sto from Germany quickly came to their minds.

PRO: The following three points speak for a buy:

  1. Good & green Obermatt ranks. The company’s 360° View is at 86, meaning Sto is generally better positioned than 86% of its competitors.
  2. Their products are primarily eco-friendly. As Sto produces essential building materials, as well as building completion materials, this means that more sustainable and energy-efficient buildings are possible. Also, the testimonials on their product quality are very good.
  3. More construction materials need to come from Europe to have more affordable housing and construction processes here. Sto’s recent investments into their European subsidiaries, as well as acquisitions, support this trend.

CONTRA: The following three points argue against it:

  1. Sto is somewhat smaller company, with a “Large” Obermatt size class. Most of the companies we buy are at least X-Large, as they are safer.
  2. The Sentiment Rank is bad compared to other ranks and stands at 57. This is due to a low Market Pulse Rank of 12, meaning that the news on the company hasn't been the best recently. It is not entirely clear why this is the case. This could be examined in more detail.
  3. There is some uncertainty across the construction industry due to labor shortages and material price hikes. However, we do think Sto’s position is rather safe, due to the fact that they produce the essential materials.

The Obermatt Coffee Chat guest investors and Dr. Stern decided to invest into Sto, as the pro points outweigh the cons. If you want to learn more about stock investing from experienced investors or help shape or invest in our Wikifolios yourself, be a part of our Coffee Break Zoom chats.

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