GuruScreen movers - Jan 27th - Which stocks may benefit from QE?

Last Thursday, the European Central Bank announced plans for a €60bn-a-month bond-buying programme aimed at revitalising the eurozone economy, countering deflation and making exports more competitive. But what does this mean for the stock market? Experience from the US and UK suggests that quantitative easing (QE) could stimulate share prices. After all, as bond prices rise and bond yields fall, investors may flock towards stocks in search of higher returns. Indeed, the German Dax index reached an all time high less than a week after QE was announced. Meanwhile, the FTSE 100 approached its all time high and touched 6,852 points. So at Stockopedia, we've been exploring how the imminent start of QE has impacted stocks that meet the strict criteria of Stockopedia's GuruScreens.

Good news for holidaymakers

QE could cause the Euro to depreciate against Sterling. This could bring good news for airlines, as UK holidaymakers see their spending money go further on the Continent. This may help to explain why EasyJet's share price has shot up by around 5% since Mario Draghi announced the latest round of QE, whereas the FTSE 100 has appreciated by less than 2%. EasyJet has also qualified for Stockopedia's Value Momentum Screen, which tries to uncover stocks that are bargain priced but are also beating the market.

InterContinental Hotels also could benefit as Brits splash out on holidays in Europe. InterContinental currently qualifies for the 52 Week High Momentum Screen, which filters for stocks that are close to their 52 week high. The company has beaten the market by more than 30% this year. Investors seem to be getting excited not only because of QE, but also because the company's Third Quarter management statement has already revealed strong revenue growth, particularly in the US, in Germany and the UK. Revenue growth was also strong in France, following the completion of the Salon Opera ballroom.

Bold Revisions for Farnell

It's not just holidaymakers that could benefit from QE. It is hoped that the ECB's bond buying scheme will stimulate spending on infrastructure projects across Europe. It is therefore interesting that some brokers are becoming increasingly optimistic about Premier Farnell - which provides software solutions to maintenance and repair engineers, and generates over 40% of its revenues in Europe. On 24 January, just days after the ECB announced its bond buying programme, Premier Farnell qualified for Stockopedia's Bold Earnings Revisions Screen, which seeks to identify stocks that have experienced recent revisions in the earnings estimates.

The company's share price has also risen by nearly 5% since last Thursday. Premier Farnell's combined Value and Quality rank is 90 - suggesting that the company could be a good quality company selling at a discount price. Indeed, Farnell is still a cheap company with a P/E (price to earnings) ratio of just 12 and P/S (price to sales) ratio of 0.7.

German Automobiles gaining momentum

BMW's recent interim report painted a positive picture. It noted that car sales volumes surpassed the previous year's figures and that revenues and earnings were up on previous years. Furthermore, BMW and other European companies in the automobile sector may benefit from cheaper borrowing rates and a weaker euro. Indeed, BMW's share price has shot up by 11% over the last week, and the German car manufacturer qualified for the Josef Lakonishok Screen just one day after QE was announced. Volkswagen AG has also risen by more than 5%, from €189 on January 21 to €199 today.

Conclusions - DYOR

So there seem to be several industries that could benefit from QE. Some cyclical automobiles in Germany have already started to beat the market, while the share prices of airlines like EasyJet and hotel chains like InterContinental Hotels have been on the rise since QE was announced. That is not to say that QE will benefit all companies within these industries, but we hope that this article constitutes a useful starting point for your research. As always - these are not share tips and should not be read as investment advice. Please do your own research before investing. Do feel free to leave any comments below.

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