My Top 10 European Hidden Gem Stocks
1. Digital Network SA WSE:DIG
2 minute summary
This is by far my most cherished hidden gem I've discovered. This company is absolutely bulletproof with its 20,000 strong digital outdoor advertising screens that operate across Poland and soon to be expanding across central Europe and Eastern Europe. The things I've found most bullish about this company is that it can't be disrupted (already 100% digital) and they have pricing power.
Most of their advertising screens are concentrated in train stations, airports and shopping centres. So when people are out doing their daily grocery run or they are travelling to an airport they will definitely come across one of these screens and look at one of the advertisements that's being displayed. Another benefit of it is it is completely digital they can change up the advertising stream/loop that they run at a moments notice using their network and there is never any downtime. It's capital light too because they don't have to pay for workers to go out and change canvas screens or billboards (like their competition) and billboards that other companies do and they have very low levels of debt whereas their competitors that I've looked into have a high debt burden.
Their management team is also doing an excellent job and have great pedigree winning several awards for their innovations in outdoor advertising using sensors an artificial intelligence to change up advertising based on weather, seasons, and the type of people and groups walking around near their smart advertising screens. For example, if the camera notices a lot of families walking paths it will start advertising for children’s toys, And the kids will be nagging their parents to go buy them a toy (as parent this is a brilliant idea). Another example is that if it's a very hot day it will advertise a cool drink, sunscreen or an ice cream.
Their customer portfolio is impressive (Adidas, McDonalds, Lego) and those sorts of companies will also always need to advertise their products to customers while they're doing their shopping.
It's been a 20 bagger over the past five years so they must be doing something right.
2. AVTECH Sweden AB STO:AVT-B
2 minute summary
AVTECH are a SaaS company in the aviation industry. They sell software to airlines that optimise each flight for fuel efficiency, avoiding turbulence and bad weather, reduced aircraft maintenance and improved passenger safety. In very simple terms they sell flight optimisation software to airlines as a service.
Most airlines operating throughout Europe use conventional weather data in 140 square kilometre blocks. AVTECH’s software gives pilots data blocks that are 10 square kilometres – that’s more than a 10x difference in accuracy. So if you're a pilot using AVTECH software you have the ability to bypass localised areas of high turbulence and optimise flight paths for fuel and efficiency more accurately.
I have recently been doing a lot of air travel outside of Europe that the customer experience sours when there are high levels of turbulence in the air. Customers hate the idea that they have to sit in their seat and can't move around the cabin and the service staff pilots have to adjust their routines to wait out the bad weather until it cleared so they can resume their tasks. Also from the fuel efficiency perspective it makes sense to use this software and if you're operating a fleet of hundreds of aircraft then the fuel saving alone would likely produce a good ROI for the airline.
They run very lean with only 20 staff and a global TAM. They have no debt. They are highly profitable with a Net Margin over 30%.
3. Eviso SpA BIT:EVISO
2 minute summary
Eviso Spa is an Italian tech company that uses AI and real time data to trade commodities. They have developed their own tech stack like algorithms an in-house data analytics programs to crunch numbers 24/7 that gives him the opportunity to buy and sell commodities at the best possible prices. They mostly operate in the energy sector right now but this can be applied to any commodity, so the TAM is huge.
To give you an idea of what they do in the energy sector, they take advantage of all the data generated from digital power meters, now compulsory in many EU countries, and leverage that data using their AI platform to optimise supply and demand for their customers (mostly electricity providers plus SMEs). To me this makes sense because the demand side of the electricity grid is going to fluctuate based on what companies and individuals are doing that requires electricity, also, the supply side will be impacted especially from the solar plants and wind plants when the sun stopped shining and the wind stops blowing.
So the way they make money is that they opportunistically buy the dip and sell it at a higher (but still competitive) price and is personalised to customers and resellers.
This company has most of the main qualities that I like in a stock. There's low CapEx involved with a low headcount, it's small and niche, it's scalable with a huge tam, there’s high insiders and low institutional ownership so management have skin in the game and they're flying under the radar.
Another thing that's really worth mentioning is that the CEO and founder is super intelligent. He is quite literally a nuclear scientist and went to Harvard Business School.