It is home to some of the most popular food staples like pizza and pasta and famous structures including the Colosseum and the Leaning Tower of Pisa amongst others, while its expansive contribution to the worlds of art, architecture, fashion, opera, design, literature and film have been lauded throughout the globe.
Despite being the third-largest economy in the EU (European Union) and the tenth-largest exporter in the world with $632 billion exported in 2019, this major industrial economy has for decades been hampered by political reluctance to change, bureaucratic inactivity and red tape. Then as COVID-19 reached its shores, its economy tailspinned into chaos. As customary with Italian politics, January 2021 was another period in which the government collapsed, however, this might have been a blessing in disguise, as the highly respected former ECB (European Central Bank) President Mario Draghi was summoned to form a technocratic government. Draghi immediately secured the backing of key political parties, while the markets view his appointment as a pivotal moment for Italy to carry out any required structural reforms.
Now backed with the largest share of the EU’s €750 billion recovery package, Italy has a unique opportunity to build a better future. Indeed, according to the Bank of Italy and the European Commission, Italian GDP is projected to grow by 5% in 2021 and 4% by 2022.
As the Italian economy is working hard to stand on its own two feet, a few Italian companies, heavyweights in their respective sector, have beaten the odds and even marked growth during the most challenging and unpreceded of times.
Have a look at these top Italian companies and their stock.
Top Italian Stocks
Enel (ENEL)
An Italian multinational manufacturer and distributor of electricity and gas, Enel was originally established as a public body in 1962, but was privatised in 1999 following the liberalisation of the electricity market in the country. Today, it produces electricity from a number of energy sources, such as geothermal, wind power, solar power, thermal nuclear power and hydroelectric power, while it is also engaged in research and development activities for the production and transmission of electricity. More specifically, it designs and implements so-called hybrid plants that combine a number of technologies and sources for energy storage, whereas it also develops smart grids to increase the efficiency and sustainability in the distribution of electricity.
The second largest power company in the world by revenue as of 2018 after the State Grid Corporation of China, Enel had a stock market capitalisation of €82 billion as of 2020, making it Europe’s largest utility by capitalisation, however, its financial performance for the year has been somewhat weak. Revenues amounted to €62.6 billion, down €14.7 billion compared with the €77.3 billion posted in 2019, with this mainly attributed to lower revenues in end-user markets caused by lower sales of gas and electricity due to the effects of the COVID-19 outbreak. One more factor was the decrease in revenues from Thermoelectric Generation and Trading due to a decrease in commodity trading activities.
Yet, Enel backed its guidance for 2021, while it is worth noting that the company has seen its share price rise 101% over the past five years and it has achieved compound EPS (earnings per share) growth of 1.3% per year. In the meantime, it has significantly increased its investments, particularly in renewables and grids so as to further boost its decarbonisation process and to make the most of any opportunities from the economic recovery that is underway. In July 2021, it announced that its subsidiary Enel Energia inked a 10-year corporate power purchase (PPA) to supply 160 GWh solar electricity annually to Italian supermarket chain PAM Panorama. Starting from 2023, the 100% clean electricity supplied to the supermarket chain will allow the reduction of 75,000 tonnes of carbon dioxide (CO2) emissions per year. In addition, it plans to dramatically boost its electric mobility business in the next decade by installing 4 million charging stations worldwide from the current 180,000. With the potential to accelerate growth in a world where decarbonisation has become crucial, these investments are set to elevate it towards a new record in renewable capacity construction by the year’s end.
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Intesa Sanpaolo (ISP)
A top banking group in Europe, with a market cap of €44.95 billion as of July 27, 2021, the company was formed through the merger of Banca Intesa and Sanpaolo IMI in 2007, however, its corporate identity goes back to 1583 when it was originally founded as the Instituto Bancario San Paolo di Torino. A Forbes Global 2000 and a component of the Euro Stoxx 50 stock market index, the Group serves 13.5 million customers through a network of approximately 4,700 branches scattered across the country. Although it is a leader in the Italian market, it has a strong international presence, mainly centred on Central-Eastern Europe and the Mediterranean basin.
While for several other major Italian companies, the pandemic was the year’s main highlight, for Intesa Sanpaolo, its €4.86 billion acquisition of UBI Banca, a local retail bank was a big event since the move created the second largest banking group in the country and the seventh-largest bank by assets in the eurozone. The acquisition appears to have had a positive effect on its 2021 financials so far. The Group’s net income for the first quarter amounted to €1.516 million, up approximately 32% from the first three months of the previous year, which was mainly driven by the positive trend in gross income.
On the other hand, shares of the group have also risen since the pandemic lows of April 2020 when it was trading at around €1.32 per share, reaching a €2.4805 peak so far in the year on June 4, 2021. The outlook for the year remains a positive one, with net income expected at well above €3.5 billion.
At the same time and despite being a banking group, Intesa Sanpaolo has joined the fight towards carbon neutrality and equal opportunities by participating in Gucci’s Sviluppo Filiere programme which was launched amidst the COVID-19 pandemic in May of 2020. With the aim to celebrate exceptional ‘Made in Italy’ manufacturers, Intesa Sanpaolo joined forces with Gucci so as to implement ethical and responsible practices throughout Gucci’s supply chain by facilitating financial resources to eligible suppliers.
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Ferrari (RACE)
It has been the envy and a dream purchase for one too many regular car owners. The manufacturer of the sports and grand touring cars bearing the legendary name, is certainly not your typical automaker. The epitome of high-end luxury supercars and one of the top companies at what it does, Ferrari has become synonymous with elegance, power and performance. With close to 70 years of production, Ferrari remains one of the top automobile names across the world.
The pandemic has slammed most automakers’ stocks thanks to factory closures, while the uncertainties of the post-pandemic economy has rendered investors wary of these capital-intensive, low-margin businesses. Yet, Ferrari appears to have been an exception. In part, its immense brand power has translated to massive pricing power and this can be seen from its stock price. During the March 2020 lows, the stock did take a dip, trading at €115.90 on March 12, 2020, however it has since recovered spectacularly, trading at €179.50 on July 26, 2021. As for revenues, these slipped in 2020, with EBITDA falling 27.9% to €913 million compared with 2019.
On a positive note, EBITDA for 2021 is expected to rise to between €1.45 billion and €1.5 billion. In fact, Ferrari’s 2021 first-quarter report was a good one, with operating profit rising 21% thanks to strong demand of its newest V-8 sports car, while higher-end models helped push its operating margin to 26.3%, 2.7% points higher than a year ago. In addition, its order book is at a record level and as a result, it is anticipating its full-year 2021 results to land at the high end of the upbeat guidance it provided back in February.
For years, Ferrari's pricing power, high margins and ROIC (return on investment capital) has made it a great business. And although it has limited its annual production to preserve exclusivity, it turns out that the company has since generated sales and profit growth over time without compromising this exclusivity. And now Ferrari is tapping into the massive opportunity afforded by electric vehicles (EVs). So far, it has made two hybrid models, the LaFerrari and the SF90 Stradale, however, in April 2021, the company confirmed that its first all-electric car will be unveiled in 2025, setting the stage for a busy few years of electification.
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ENI (E)
Considered one of the seven so-called supermajor oil companies in the world, with operations in 68 countries, Eni is an oil and gas enterprise headquartered in Rome, but for several years following its founding, it has operated in a number of fields including nuclear power, energy, mining, chemicals and plastics and as diverse industries as those of the hospitality and textile sectors. A component of the Euro Stoxx 50 stock market index, the company’s current market cap stands at €35.61 billion as of July 28, 2021, while in 2020, it made the cut on the Fortune Global 500 and Forbes Global 2000’s lists.
By the time COVID-19 reached pandemic status, Eni’s stock was trading at €6.9112 on March 13, 2020. Then on October 30, it dipped even further reaching an all-time low of €5.885, yet since then, the stock has managed to gained approximately 66.5%, currently trading at €9.80. The oil supermajor’s revenue throughout 2020 fell short, reporting an operating revenue of €43.99 billion, down from €69.88 billion in the previous year and just as was the case with its stock, 2021 proved to be markedly better for the company. For its first quarter 2021 results, it noted a strengthened upstream price environment mainly driven by a recovery in the main market benchmarks. Adjusted EBIT was at €1.3 billion, up by 171% from the fourth quarter of 2020, while adjusted net profit was at €270 million, almost five-fold the result reported in the first quarter 2020.
As an integrated energy company dedicated to achieving decarbonisation of its products and services by 2050, Eni has worked hard at integrating sustainability into its business model. From the exploration, development and extraction of oil and natural gas to the generation of electricity from cogeneration and renewable sources, traditional and biorefining and chemicals, as well as the development of circular economy processes, the company has ensured it delivers operational excellence.
And just as the pandemic created risks for the oil and gas industry, it also forged opportunities. The company has had a busy month, making important strides in the renewables market thanks to two acquisition deals. The first will see the company acquire Spanish and French solar assets of Madrid-based solar developer Dhamma Energy. The second deal will see the transfer of a total of 1.2GW of wind and solar energy projects in Spain in the hands of Eni, with a portfolio that includes three onshore wind farms, as well as five large-scale solar projects with a total capacity of 1GW. In addition, Enel signed agreements with Kazakhstan’s state-run KazMunaiGas to widen the company's energy transition scope in the Central Asian country for the development of renewable, hydrogen and biofeedstock projects in the country.
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Banca Generali S.P.A (BGN)
A private banking and wealth management group predominantly targeting affluent and private clients through a network of financial advisors, private bankers and relationship managers, Banca Generali provides a full range of banking services, asset management and insurance products, combining in-house expertise with a multi-brand offer of asset management products. What’s more, it manages a range of foreign mutual funds and operates through a number of subsidiaries.
A top-notch company in its field, representing the blue-chip of Borsa Italiana, it has won several accolades, amongst which include the Global Brands Awards organised by Global Brands Magazine which it nabbed in 2018, while it received the ‘Best Bank in Italy Award’ from the Financial Times’ Group magazines for the years 2012, 2015, 2017, 2018 and 2019.
As recently as July 27, the Italian asset manager posted a 44% rise in first-half net profits, thanks to higher demand for financial advisory services and the successful commercial policies it had implemented. According to the company, this has been the bank’s best ever half year with net profit of €190.1 million, while the wealth management arm saw its net profit come in at €190.1 million during the January-June period. At the same time, it managed to exceed its three-year Industrial Plan targets totalling €14.8 billion net inflows, while it also exceeded the higher target for total assets, which reached €80.4 billion. As a result, it raised its full-year guidance for net inflows to between €5.5 and €6 billion.
Big on sustainable growth, Banca Generali has made several moves to boost its offering and move towards digitisation. Its efforts began in 2014 when it launched its proprietary platform on the market to provide digital wealth management solutions, instigating a model that other European private banks look to today. Then, in December of 2020, it invested $14 million in Conio, an Italian-founded, California-based bitcoin company. Applauding its efforts for innovation, the Financial Times Group nominated Banca Generali as the best private bank for use of technology and as a rsult, it won the 2021 Wealth Tech Awards.
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Snam (SRG)
An energy infrastructure operator like no other and among Italy’s largest listed companies by market cap, Snam was originally a subsidiary of Italian energy company Eni, however, it has since become an independent firm, with CDP Reti, a holding company controlled by the Italian state which is among its largest shareholders. Through its sustainable and technologically advanced network, Snam ensures the security of supply, while it is a key enabler in the energy transition. With an international footprint that spreads across all corners of the globe, the company operates in several countries amongst which include Albania, Austria, Greece, Italy and the UK, as well as China and India. What’s more, the Group runs the largest natural gas transmission network, which amounts to approximately 41,000km.
Results posted in the first quarter of 2021 have confirmed Snam's growth path, mainly attributed to its core business and new associate companies. The company reported total revenues of €717 million, marking a 5.6% increase compared to the first quarter of 2020 on a pro-forma basis, while EBITDA came in at €559 million, an increase compared to the first quarter of 2020. Meanwhile, earnings per share were at €0.10 per share, exceeding the €0.09 anticipated by analysts and exceeding last year’s first-quarter results by 11.11%. In addition, in 2020, Snam paid a dividend of €0.25, a good 5.01% increase over last year.
To strengthen its clout in the industry even further, Snam increased its investments, spending over €230 million in the quarter. As a result, it is forging ahead with implementing various initiatives in its hydrogen segment, as well as reaching energy efficiency, biomethane and sustainable mobility to support its ongoing ecological transition and to meet climate targets.
A company known for its innovative spirit, in April 2019, Snam launched the first injection of a hydrogen and natural gas into the pipeline, paving the way for Europe’s first commercial test of a hydrogen-methane blend in high-pressure network. More recently, in July of 2021 the company together with the cruise division of MSC Group and shipbuilding company Fincantieri forged a partnership to determine the conditions for the design and construction of what would become the world’s first oceangoing hydrogen-powered cruise ship. According to the company, hydrogen can serve as a key enabler in achieving the target of net zero emissions in shipping which accounts for approximately 3% of global Co2 emissions.
It’s time to add Snam (SRG) to your portfolio.
Poste Italiane (PST)
With a history spanning over 150 years, a network of more than 12,700 post offices, 35 million customers and a workforce of approximately 125,000, Poste Italiane’s contribution to the production chain and the national economy has been unvaluable. The largest logistics operator in Italy and a leading player in the financial, insurance and payment services sector, the company may be known for its postal services, however, it also operates in the areas of deliveries, logistics, savings sector, as well as financial and insurance services, while it offers its products to individuals, companies, as well as public administration.
In May 2021, the company reported a higher than expected 41% rise in first-quarter operating profit, boosted by its insurance division and increasing parcel revenue. EBIT came in at €620 million in the first three months of the year, beating analysts’ consensus of €573 million. The traditional mail and parcel business, as well as the digital payments unit reported revenue of €2.93 billion in the quarter, up from €2.67 billion a year earlier. On the other hand, the smaller payment and telecoms unit saw a 3.7% increase in its operating profit as a rise in eCommerce transactions during the pandemic boosted digital payments.
But there’s another appealing factor to the company. Since debuting on the stock exchange in 2015 and up to February 2020, the company’s share price has increased, affording shareholders an overall return of +63.8%. With a turnover of over €12 billion, a market revenue of €10.5 billion, an EBIT of €1.5 billion and a net profit of €1.2 billion according to the Group’s 2020 annual report, Poste Italiane make an attractive dividend stock.
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How to invest in Italian stocks
Ready to buy a share of these top Italian stocks? Your first step to tapping into a world of investment opportunities with Moneybase Invest is to sign up and open an account.
- Download the app from either Google Play or the Apple App Store. Alternatively, you may access Moneybase Invest on your desktop by visiting https://live.cctrader.com/
- Once you’ve onboarded successfully and have funded your account, head over to the search bar at the top of your screen and input either the company name or ticker symbol.
- Select the instrument of your choice from the list and then click on the Buy button on the window located at the bottom of your screen.
- On the New Order page, input the number of shares you would like to purchase and hit the Place Buy Order. The stock has been added to your portfolio.
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