7 Top Spanish Stocks To Buy

Top Spanish Stocks To Buy: Spain is the largest country in Southern Europe. The country is known for its rich cultural heritage, ancient civilization, majestic monuments, vibrant culture, diverse landscapes and breathtaking scenic beauty. No wonder it is one of the most visited countries in the world.

The headquarters of the World Tourism Organization are located in Madrid. However, many investors, especially those outside Spain, may not have heard much about its publicly traded companies. To help matters, we list here the top Spanish stocks of companies operating in the utilities, infrastructure, telecommunications and media sectors, among others.

Banco Sabadell

Banco de Sabadell SA [BME: SAB] is a Spain-based financial institution, primarily engaged in the banking sector.

The Alicante, Spain-based group is the fifth-largest Spanish banking group with operations throughout the country, as well as in Europe, the Caribbean, the Americas, and Asia.

Sabadell provides personal and retail banking, private banking services, investment funds, insurance products, mortgage, consumer, student, and building improvement loans for businesses and individuals.

Banco de Sabadell SA [BME: SAB] recently reported a net loss for the fourth quarter, which led to a significant decline in its stock price. The Spanish bank said that it made a net loss of 15 million euros ($16.5 million) for the fourth quarter, which is in sharp contrast to the net profit of EUR80 million it made in the same quarter last year. Sabadell blamed Spain’s Deposit Guarantee Fund, a tax payment and an extraordinary provision, for its loss.

The good news is that a majority of the factors contributing to the lower profit will be non-recurring. Irrespective of the net losses, the bank confirmed its intentions to propose a supplementary dividend of EUR 0.02 per share, which brings its total dividend for 2019 to EUR 0.04 per share.

Banco de Sabadell’s earnings over the next few years are expected to grow at a rapid pace, indicating bright prospects for the company.

Buying stocks of a company, which are currently underpriced but have a robust growth outlook, is always a prudent investment decision. Sabadell fulfills both these criteria, which makes it a strong buy candidate.

Enagas

Enagas SA [BME: ENG] primarily engages in the natural gas transportation, storage, and regasification business in Spain and internationally.

Enagas provides gas transportation services through gas pipelines for the primary and secondary transport of gas to distribution points, and operates regasification plants in Barcelona, Huelva, and Cartagena.

The company imports liquid natural gas on methane carriers and operates underground storage facilities to coordinate the access, storage, transportation and distribution process for maintaining the continuity and security of gas supply.

Despite the current market volatility, Enagas SA [BME: ENG] is a prime buy contender. Although the threat of the virus and the economic disruptions it is causing, utilities companies are still in demand. This is the reason why such companies are generally seen as stable cash cows for conservative income investors.

The natural gas utility company pays good dividends and is currently trading at a 5-year low.

Natural gas will always be in demand and Enagas ensures that its natural gas supplies are in abundance to keep its customer base happy and secure.

Enagas has paid its stakeholders really well and its business model is robust. Recently, Inditex (ITX.MC) founder Amancio Ortega bought a 5% stake in Enagas, buying shares worth 282 million euros ($311 million).

Enagas also announced that it would buy U.S. energy infrastructure company Tallgrass Energy as part of a takeover involving other investors, including Blackstone and Singapore’s sovereign wealth fund GIC.

Despite the market’s current worrying volatility, Enagas should definitely be on your radar as the stock is going to reward investors handsomely once the market rebounds.

Ferrovial [BME: FER]

Ferrovial SA is a leading Spanish infrastructure operators and municipal services company.

The company’s activities are divided into several business segments, including Services, Toll Roads, Construction, Electrification, Water and Mobility. The company has more than 89,968 employees and a global presence in 6 main markets.

Ferrovial, S.A. [BME: FER] has an impressive history of richly rewarding its shareholders, who have seen the share price rise 73% over three years, which is way above what the market has returned.

There has been some dip in performance lately, with the stock returning just 52% in the last year, including dividends.

The good news for Ferrovial investors is that the company, which has expertise in handling both toll roads and airports, is going to benefit a lot from increased infrastructure privatization in the U.S.

The model being worked out is that a state leases an airport to a private operator, with some financing provided by state or local pension funds.

Toll roads in the U.S. are primarily handled by non-U.S. companies because of a lack of expertise domestically. And in all probability, it is highly unlikely that there will be any domestic bidders to run privatized airports.

There are many infrastructure companies that run toll roads, but only a few have expertise in running airports. All in all, a very favorable scenario for Ferrovial, whose earnings over the next few years are expected to double, implying that now could be a great time to delve deeper.

Gestevision Telecinco

Gestevisión Telecinco, S.A, now known as Mediaset España Comunicación, S.A., [OTCMKTS: GETVF] is a Spanish television network and media production company based in Madrid. The company, together with its subsidiaries, is involved in the indirect management of a public television (TV) service in Spain.

The company operates seven TV channels, invests in film production and sells advertising. In addition, it has various shares in companies in the audiovisual sector, mainly in Spain, as well as in other countries.

Mediaset España Comunicación, S.A., [OTCMKTS: GETVF] reported net revenues of EUR 946.2 million, while net profit for the year increased by 5.7% to EUR 211.7 million. This is the best result in terms of net profit over the last 12 years.

On May 29, 2019, Mediaset announced the acquisition of a 9.6% stake in the German broadcaster ProSiebenSat.1 Media, intending to develop economies of scale and generate viewership that could help it better compete with global players— a move which is crucial for the future of European TV.

The media company is also known for aggressively looking at new business opportunities, which can help it offer the best content and viewing experience across all platforms. The company finds itself in a unique position to create a pan-European media and entertainment group, with a leading position in its local markets and greater scale to compete and potential to expand further in specific countries across Europe.

Its strong in-house production resources aid in developing engaging content for viewers as well as enhance its ability to develop and supply content to third parties. Greater consolidation in a highly competitive media landscape puts it in a better position to negotiate a better deal with suppliers and establish a first-mover advantage in the market.

If you’ve been keeping an eye on TL5 for a while, now may not be the most optimal time to buy, given its high-growth potential and current low value of its stocks.

Endesa

Endesa SA [BME: ELE] is a Spain-based holding company engaged in the business of generation, transmission, distribution, and commercialization of gas and electricity in Spain, Portugal, and North Africa.

A majority-owned subsidiary of the Italian utility company Enel, Endesa has 10 million customers in Spain, and is also a major operator in the natural gas market. Combining nuclear, fossil-fueled, hydroelectric, and renewable resource power plants, Endesa generates over 98,000 GWh annually in Spain. It distributes electricity to consumption points and offers other services related to the energy business.

Endesa SA [BME: ELE] reported net ordinary income of Euros 1,562 million (+3.4%) in 2019. The stock is lucrative from a dividend perspective as well, given its dividend yield of over 6% and a payment history of over ten years.

Endesa has grown its earnings per share at 66% per annum over the past five years, which is a good sign for investors as rapidly growing EPS makes the dividend sustainable.

Endesa announced that it would invest €2,000 million until 2020 for the improvement of the distribution grid. The company will allocate €1,200 million for the digitalization of the electrical grid and €800 million for the updating of current assets, efforts which are expected to improve the quality of supply by 20%.

This will help Endesa solidify its dominant market position and feed into its stock price. If you are looking for stocks with good returns, Endesa, S.A can be a profitable investment option.

Iberdrola

Iberdrola SA [BME: IBE] is a Spanish multinational electric utility, which engages in the generation, distribution, trading, and marketing of electricity in the United Kingdom, the United States, Spain, Portugal, Italy, France and Latin America.

The Bilbao, Spain-based global energy company operates through the following businesses: Networks, Liberalized and Renewables. The company specializes in clean energy and is the number one producer of wind power, and one of the world’s biggest electricity utilities by market capitalization, supplying energy to over 100 million people.

Iberdrola SA [BME: IBE] plans to invest €32 billion between 2018 and 2022, which will increase its annual production by over 15%.

Heavy investments, higher tariffs and better efficiency in electricity production and transmission are delivering excellent results for the company.

Iberdrola’s fiscal year 2019 net profit increased by 13% to a record of €3,406 million. The energy giant also proposed shareholder remuneration of EUR 0.40/share, an increase of 14%.

In 2022, net profit is forecast between €3.5 billion and €3.7 billion and the company is optimistic about maintaining its shareholder remuneration policy, growing in line with results.

The company also completed the sale of Siemens-Gamesa stock in January 2020 for EUR1.1billion with EUR 485 million of capital gain.

All these factors point towards a bright feature for the company, implying that you should definitely think about this Spanish stock.

Telefonica

Telefonica, S.A. [ BME: TEF] is an integrated and diversified telecommunications multinational group, which provides mobile and fixed communication services primarily in Europe and Latin America.

The company’s services and products include mobile business, fixed wireless, fixed-line telephone business, broadband, subscription television and digital services.

Madrid, Spain-based Telefonica is one of the largest telecommunications companies in the world in terms of market capitalization and the number of customers.

Telefonica, S.A. [ BME: TEF] Q4 -19 revenue stood at EUR48.4 billion. The underlying net income and EPS in this period reached EUR3.6 billion and EUR0.65 per share respectively.

Net debt decreased 8% versus where it was in December 2018 to EUR37.7 billion, and capex over sales stood at 15%.

The Spanish telecommunications giant slashed more than 4,500 jobs in 2019, around 4% of total positions, as it continues to strive to concentrate its efforts on boosting profits in a smaller number of key markets, primarily Spain, Brazil, the UK and Germany. The mobile operator also plans to spin off its other Latin American businesses into a separate unit.

As part of its efforts to venture into new businesses, Telefónica has also set up an infrastructure business that includes its towers. And it has made its intentions and interest clear of courting external investors to acquire a stake in Telefónica Infra, as the new firm is named.

Telefonica is expecting from its another new division Telefónica Tech additional €2 billion ($2.2 billion) in revenues by 2022 through the sale of cybersecurity, Internet of Things, big data and cloud products. The stock is down courtesy the COVID-19 crisis, which makes it the right time to scoop up the shares, as the prospects look bright for the company.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.