Animations: Christa Jarrold
Businessweek
10 Companies to Watch
Q4 2023
Following our list of 50 Companies to Watch in January and quarterly updates in the spring and summer, we’re back with 10 specifically for the fourth quarter based on scenarios from Bloomberg Intelligence analysts. The companies in the spotlight span sectors and regions and are part of a larger group of high-confidence Focus Ideas that BI analysts identify on an ongoing basis. Each scenario outlines important catalysts coming in the next few months that support our case.
For more information on Bloomberg Intelligence, please visit www.bloomberg.com/bi
Auto retailing
AutoNation Inc.
Outlook ☀️
As a retailer of both new and used cars, AutoNation is well positioned to capture profits as the market shifts between the two sides of the business. With rising costs and stiff competition hammering margins on used vehicles, the company has been able to focus on the fatter earnings in the new-car market, which could drive higher consensus estimates. The strike in Detroit adds to this thesis, with lower production likely to firm pricing of new vehicles.
—Kevin Tynan
Data Sheet
Market cap
$6.6B
Estimated annual sales
$26.5B
Forecast sales growth
2%
CEO
Michael Manley
Legal name
AutoNation, Inc.
Triggers
- Third-quarter results on Oct. 27 are poised to showcase increased profits from the growth in new-car sales, BI’s analysis predicts.
Brewing
Budweiser Brewing Co. APAC
Outlook ☀️
The beer giant’s Asia business, with shares traded in Hong Kong, is positioned to beat the consensus estimate for its profit margin by more than two percentage points in 2023-24. Its premium brands in India, China, South Korea, Japan and beyond will benefit from falling input costs as expensive pandemic-era hedges expire and demand “on premises,” in bars and restaurants, continues to rise.
—Ada Li
Data Sheet
Market cap
$27.3B
Estimated annual sales
$7.2B
Forecast sales growth
9%
Co-Chairman, CEO
Jan Craps
Legal name
Budweiser Brewing Company APAC Limited
Triggers
- Beer industry data for the third quarter, released in October, will likely reflect strong sales during one of the hottest summers on record.
Property
China Resources Land Ltd.
Outlook ☀️
Defying concerns about the troubled Chinese property market, CR Land’s “contracted sales” will grow 20% this year, BI predicts, about double the consensus forecast. The company has expanded its large land bank in the biggest mainland cities in recent years, and its strong project management has helped it avoid other developers’ woes.
—Patrick Wong
Data Sheet
Market cap
$28.5B
Estimated annual sales
$31.6B
Forecast sales growth
10%
Chairman, Executive Director
Li Xin
Legal name
China Resources Land Limited
Triggers
- Sales are likely to jump in October, with new project launches timed for China’s National Day holiday period in the first week of the month.
Utilities
Enagás SA
Outlook ☁️
Deteriorating cash flow is putting the Spanish natural gas utility’s credit quality in jeopardy as it increases hydrogen-related investments. Enagás would like to sell its US gas exploration unit to raise capital, but prices are depressed. BI’s scenario sees a significant risk of management cutting the dividend by as much as 50%—a move the market isn’t expecting.
—Patricio Alvarez
Data Sheet
Market cap
$4.4B
Estimated annual sales
$1B
Forecast sales growth
-5%
CEO
Arturo Gonzalo Aizpiri
Legal name
Enagás SA
Triggers
- Third-quarter results to be released in October will likely show another increase in net debt to cash flow.
Financial services
Futu Holdings Ltd.
Outlook ☀️
The Hong Kong-based online broker is reaping rewards from rising interest rates and new accounts in China and elsewhere. Interest income accounts for more than half of Futu’s revenue, and BI expects that the company, with most cash balances in US dollars, will see profits jump almost 60% in 2023. And in May, China clarified rules for opening new offshore accounts, helping boost customer sign-ups.
—Sharnie Wong
Data Sheet
Market cap
$8.2B
Estimated annual sales
$1.2B
Forecast sales growth
11%
Chairman, CEO
Hua Li
Legal name
Futu Holdings Limited
Triggers
- Third-quarter results, due in November, should show accelerating customer acquisitions, rising profit guidance and details on an expansion into Malaysia.
Coffee & soft drinks
Keurig Dr Pepper Inc.
Outlook ☀️
With its iconic coffee and soft drink brands, Keurig is poised to deliver a positive surprise. Its K-Cups and brewing machines generate about a third of its profits, which were depressed in 2022 by the pandemic reopening and high prices for coffee beans. Both of these factors are normalizing, and the consensus looks about 10% too low on earnings through 2024.
—Ken Shea
Data Sheet
Market cap
$46.2B
Estimated annual sales
$14.9B
Forecast sales growth
5%
Chairman, CEO
Robert James Gamgort Jr.
Legal name
Keurig Dr Pepper Inc.
Triggers
- October should bring third-quarter results with coffee profit exceeding expectations, driven by a widening profit margin.
Software
Pegasystems Inc.
Outlook ☀️
The provider of customer relationship-management software is appealing a $2 billion jury award to competitor Appian related to Pegasystems’ alleged theft of trade secrets. BI’s litigation analysis, based on comparisons with similar cases, suggests the award could be largely reversed and possibly overturned completely.
—Tamlin Bason
Data Sheet
Market cap
$3.5B
Estimated annual sales
$1.4B
Forecast sales growth
10%
Chairman, CEO
Alan Trefler
Legal name
Pegasystems Inc.
Triggers
- A Virginia Appeals Court is expected to hear Pegasystems’ arguments in the fourth quarter or early next year.
Banking
Societe Generale SA
Outlook ☁️
A decision by the French bank to boost its capital buffer means its dividends and stock buybacks will likely undershoot consensus. This is compounded by weak results from its investment bank, which has lost market share to global peers, and earnings momentum lagging its closest rival, BNP Paribas.
—Philip Richards
Data Sheet
Market cap
$20.1B
Estimated annual sales
$27.7B
Forecast sales growth
5%
CEO
Slawomir Krupa
Legal name
Société Générale SA
Triggers
- BI expects SocGen to show further slippage at its investment bank business and no new share buyback plans when it reports third-quarter results on Nov. 3.
Telecom
Telia Co.
Outlook ☁️
The Nordic telecom provider’s cash flow is likely to miss expectations, which in turn risks a resetting of its generous dividend payout. BI’s analysis suggests that operating cash flow won’t cover current payout plans, and debt levels are already high. Rising interest costs and additional investments in mobile spectrum have offset cost-cutting efforts. A new CEO, to be announced in coming months, could implement a new restructuring plan and scale back dividend expectations.
—Tom Ward
Data Sheet
Market cap
$8.2B
Estimated annual sales
$8.4B
Forecast sales growth
0%
President, CEO
Allison Kirkby
Legal name
Telia Company AB
Triggers
- The announcement of third-quarter results, expected on Oct. 21, will likely spur additional cash flow and earnings estimate cuts for 2023 and 2024.
Industrials
VAT Group AG
Outlook ☀️
The Swiss producer of specialized high-vacuum valves that are integral to semiconductor manufacturing is a direct beneficiary of the chip cycle being fueled by the growing needs of AI and cloud computing. BI projects VAT’s revenue will grow 13% annually through 2027, with earnings beating market expectations by more than 20% via a series of positive revisions.
—Omid Vaziri
Data Sheet
Market cap
$10.5B
Estimated annual sales
$1B
Forecast sales growth
16%
CEOs
Michael Allison, Urs Gantner
Legal name
VAT Group AG
Triggers
- A sales update in October should point to improving demand for VAT’s valves, and management comments on new chip fabrication investments in the US and Europe provide another potential positive.
Illustrations by Christa Jarrold
Sales figures are for 2023.
Market value as of Sept. 29, 2023.