Each week, a professional investor tells MoneyWeek where he'd put his money now. This week: Alan le Maistre, assistant investmentmanager, Ashburton European Equity team.
The first stock I like is Duerr (F: DUE). Duerr designs and builds fully automated paint finishing plants, primarily for the vehicle industry, which plays into the trend towards increased energy efficiency and automation.
In vehicle production, paint shops account for roughly 40% of energy costs. The painting process is slow and complex duplicate lines can be quickly created for most other points on the assembly line, paint shop capacity is limited and so the painting process is a key production bottleneck.
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Duerr's plants are the industry's most efficient (energy consumption is 35% below the industry standard) and offer significant cost savings over a plant's lifetime, while cutting emissions and waste.
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It has a near monopoly in sales to high-end original equipment manufacturers and benefits from the production shift to emerging markets, which represent 65% of its incoming orders. Costs here are cheaper and vehicle penetration is rising from low levels (China has 60 cars per 1,000 inhabitants versus a Western average of 500 per 1,000).
Secondly, I like shipping firm Golar LNG (Nasdaq: GLNG), which operates a liquid natural gas (LNG) tanker fleet. In an age where other hydrocarbons are considered dirty, renewables too reliant on government funding and nuclear dangerous, it's likely we will turn to gas. Unconventional gas is abundant, but requires new recovery techniques. Advances in fracking technology have dramatically increased supply, while developments in liquefaction have facilitated a global trade in gas.
For LNG tankers especially, record-high usage rates look set to continue as fleet growth estimates remain low and demand climbs. New long-haul trade routes (eg, US-Asia) will increasedemand for the stretched global fleet.
Moreover, increasing capital expenditure guidance for LNG infrastructure (from ports to liquefaction plants) has cut industry bottlenecks. Huge regional price differentials for natural gas, ranging from $10 per British thermal unit in Europe to $17 in Japan and $3 in America, highlight the growth potential.
My final pick is German biotech MorphoSys (F: MOR), a beneficiary of personalised medicine. It specialises in developing fully human monoclonal antibodies, used in therapeutics, research and diagnostics. Its ground-breaking HuCAL programme is the most notable of its technologies, producing pure human antibodies that are superior to the industry standard ones derived from mice.
The company has one of the world's broadest pipelines of new drugs. It has grown 100% over five years, and consists of 68 partnered programmes and ten proprietary ones, addressing as yet unmet medical needs in the fields of cancer and autoimmune disease. The probability of a new antibody drug project reaching the market is 11% and MorphoSys's technology suggests higher approval rates can be expected.
Conservative estimates indicate that at least 17 drugs should reach the market in the next ten years from its partnered pipeline alone. In 2010, each of its five biggest antibody drugs (of only 29 approved in the US) recorded annual sales in excess of US$5bn. With an enterprise value of €280m (€400m market cap, €120m net cash), the stock looks undervalued.
