The Ibex 35: an attractive index full of opportunities in 2024Throughout 2024, the Ibex 35 has surprised investors with a 17% rally since the start of the year, consolidating its position as one of the best performing indices in Europe. This has been driven by key sectors such as banking, telecommunications, tourism and renewable energies. Despite this strong advance, the Spanish stock index is not considered expensive, offering an attractive opportunity for investors seeking long-term value.
An attractive price to book value
The Ibex 35 currently trades at a price-to-book ratio of 1.5x by 2025, making it one of the most attractive indices compared to its track record over the past decade. This discount has been made possible by the solid performance of the companies comprising the index, which have been able to take advantage of a favorable macroeconomic environment and persistently high interest rates in Europe.
Among the stocks that stand out for their discount to book value are Cellnex, Solaria and Rovi. Cellnex (Ticker AT: CLNX.ES), a leader in telecommunications infrastructure, trades at 1.8 times book value, well below its average of 11 times. This discount is in response to interest rate hikes and the company's deleveraging, which could lead to an increase in shareholder remuneration in the coming months. Solaria (Ticker AT: SLR.ES), one of the leaders in solar energy, trades at 2.5x versus a historical average of 9.7x, penalized by the fall in energy prices and delays in key projects. For its part, the pharmaceutical company Rovi (TICKER AT: ROVI.ES) offers a discount of more than 50% compared to its historical book value, making it one of the most attractive options for 2025.
Spanish banking leadership
Banking has been one of the big drivers of the Ibex 35 this year, boosted by the prolongation of a high interest rate environment. BBVA (TICKER AT: BBVA.ES)and Santander (SAN.ES), two of the index's leading banks, have seen their profit margins expand, and everything points to them remaining key players in the index's performance in the coming quarters.
In addition, other major Spanish companies such as Inditex (Ticker AT: ITX.ES), Telefónica and IAG have also played a relevant role in the Ibex leadership, benefiting from the recovery of tourism and post-COVID consumption, as well as organic growth and international expansions.
Outlook for the Ibex and the Spanish stock market
Despite the accumulated gains, the Spanish stock market continues to offer value. In addition to its discount to book value, macroeconomic expectations, especially in Europe, where possible interest rate cuts are expected, may continue to favor key sectors such as banking, infrastructure and renewable energies. These positive signals offer investors the opportunity to continue to participate in a market that has demonstrated strength and growth.
With a strong base in strategic sectors and the support of monetary policies that could become more accommodative in the coming months, the Ibex 35 continues to show great potential for appreciation in the medium and long term. Investors betting on this index will not only find companies with solid fundamentals, but also attractive dividends that complete the positive outlook for the Spanish stock market.
Ion Jauregui - Analyst ActivTrades
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