Before the bell: interest rates start rising worldwide

Rising inflation expectations are beginning to have a global impact on interest rates. The chocolate holding Compagnie du Bois Sauvage has unveiled a new plan to increase shareholder value.

Rising inflation expectations are slowly starting to affect financial markets. In Europe and the United States, long-term interest rates have risen by 20 basis points over the past week. Not only higher oil prices but also food prices threaten to push inflation higher, making interest rate cuts by central banks unlikely. The Dow Jones (-1.6%) closed in the red with losses across several sectors, including Goldman Sachs (-3.7%), Walmart (-3.5%) and Caterpillar (-3.5%). Investors will soon be able to react to the quarterly results of supermarket chain Costco (-2.4%), after the company slightly beat analysts’ expectations. The share price of camera maker GoPro could fall further as revenue figures disappointed. The stock risks becoming a penny stock as a result.

In Asia, stock markets are trading steadily this morning, with calm seemingly returning to the markets of Japan and South Korea. In Hong Kong, the Hang Seng index is even up 1.8%. In Belgium, the focus this morning is on the annual results of Compagnie du Bois Sauvage. The group will implement a major restructuring plan in which many holdings will be sold and the company will focus more on its chocolate activities. This should reduce the discount to intrinsic value, which currently stands at 45%. Bnode, the owner of bpost, also published its quarterly results. The group reported a net loss of 40 million euro for 2025, marking the second consecutive year of losses. Property developer Atenor also reported a loss of 139 million euro for 2025. Investors will soon be watching to see whether profit-taking sets in ahead of the weekend.

The price of safety

If you are looking for safety as an investor, look for companies with recurring revenues and a defensive business profile. One company in the United States that clearly understands this is the supermarket chain Costco. With revenue of 69.6 billion dollar last quarter, the group is a global giant that relies heavily on its so-called membership model. Costco does not earn much from selling products themselves but mainly from annual subscriptions. The quarterly results the group published after the close on Thursday showed that membership fees amounted to 1.36 billion dollar for the quarter, compared with a total profit of 2 billion dollar. The company focuses on low-cost bulk purchases and basic services such as food, where little money is made. But those low prices and margins ensure strong customer loyalty. Worldwide, 89.7% of customers renewed their membership this quarter. On the stock market, however, you pay a high price for that security. Today investors are paying about 50 times next year’s earnings, which is comparable to companies such as Lotus Bakeries. Quality comes at a price. Fortunately, there are still other attractive shares on the shelf for investors.

The taste of sweet chocolate

Every year the investment platform IEX asks me for my three investment tips for the coming year. This was the first year in which I wanted to give only one tip, and even then one that I had first shared with the members of Spaarvarkens. The tip? Compagnie du Bois Sauvage, a share I already recommended here before Christmas at 270 euro per share. The reason is the falling cocoa price, which should improve margins in the sector. For that reason we at Spaarvarkens are also fans of the other chocolate producer, Barry Callebaut, which we bought last year at 1,000 Swiss franc for a buy-and-hold position. Since then Barry Callebaut has risen 40%, while cocoa prices have fallen by more than 60% over the past year. I believe Bois Sauvage, with its chocolate division, can also benefit strongly from those lower cocoa prices. That is especially true now that the holding announced yesterday evening that it intends to sell all listed companies in its portfolio. The group also announced that it wants to focus even more on chocolate by acquiring a 34% stake in the chocolate group Jeff de Bruges, making it the full owner of the company. As a result of these moves, about 70% of the group’s value will consist of its chocolate activities within a few years, gradually reducing its character as a holding company. If you then look at the intrinsic value per share of554 euro, the stock can currently be bought at a discount of 45%. That offers opportunities both through growth of the chocolate activities and through a reduction of the holding discount. For a buy-and-sell position, I am therefore placing an order for four shares at 310 euro per share. If the discount can shrink to 25% to 30% and the value of the chocolate division becomes more visible, there is still plenty of potential in Compagnie du Bois Sauvage. Just as with Barry Callebaut.

Did you know…

that Compagnie du Bois Sauvage received a lot of criticism in 2021 for selling Recticel at 13.50 euro? Shortly after the sale, the share price rose by 50%, which damaged the reputation of the holding. Today Recticel trades at 10.50 euro per share.

This article was translated from Dutch and was originally published on Spaarvarkens.be.