(News Bulletin 247) – As investment in the stock market appreciates in the medium and long term, we have established a top 10 of the CAC 40 over three horizons. Certain names appear in these three rankings and seem essential.

The year 2024 proved difficult for the CAC 40 which fell by 2.14% and underperformed almost all European and even global markets. Most of its residents suffered, with 23 out of 40 showing a decline.

If the 2024 vintage is therefore to be forgotten, it should be remembered that investment in the stock market is not appreciated over one year but over the medium and even long term. Over a long or even very long period, it is almost impossible to beat the stock market. Deutsche Bank highlighted this very well in an infographic published this summer which studied the behavior of different asset classes over…50 years.

Without going back that far, we asked ourselves which stocks were progressing the most within the CAC 40 in the medium and long term, in terms of gross stock market performance (i.e. the variation of the stock without taking into account the payments of dividends).

For this we have chosen two medium-term horizons, namely three years and five years. Quite simply because these periods allow us to go back to January 2022, when the world was emerging from the pandemic (with the exception of China) and January 2020, when the health crisis had not yet broken out in the West. For the long term, we stuck to a classic period of 10 years. We’ve established three “top 10s” in the infographics below.

Hermès still at the highest

Ultimately, these three rankings make it possible to identify several quality stocks, which manage to appear in each of the three “top 10s”.

One action particularly stands out: Hermès. The best luxury student is on the podium of the three “top”, occupying second place over three years, first over five years and first over 10 years. Over 10 years, its performance rivals that of the major tech groups on Wall Street. Hermès takes 809.31%, while Apple gains less than 700% over the same period.

Debates over the valuation of Hermès have existed for many years. They already divided analysts when the company joined the CAC 40, in 2018, or even well before. Yet the company continues to progress, almost every year (with a notable exception in 2022). Again in 2024, a terrible vintage for luxury, marked by a violent slowdown in demand, the stock gained 21%, while the other groups fell significantly. HSBC noted in December that Hermès managed to outperform its competitors in difficult times, thanks to its waiting lists for its products and its “economically stable” clientele, but also in more favorable times, thanks to its products not linked to leather goods.

Hermès has perhaps the most significant pricing power in the luxury sector, with demand exceeding supply putting the company in a situation quite comparable to Ferrari. HSBC believes that the group will show the strongest growth again this year in luxury, with an increase of 11.1% in 2025.

In the same sector, LVMH is absent from the Top 10 over three years, due to a fall of 13.4% in 2024 and a decline of 6.5% in 2022. But the number 1 in luxury remains one of the best students in the Parisian index over five years (6th) and especially over 10 years (2nd).

Saffron, the other pearl of the CAC 40

Another quality group in the spotlight in these three rankings: Safran. The industrial sector recorded both the largest increase in the CAC 40 over three years and the third largest increase over 10 years.

The aeronautical equipment and engine manufacturer is “only” eighth in the five-year ranking because its stock was trading very close to its historic highs (at the time) before the outbreak of the pandemic. The health crisis then grounded planes and caused air traffic to plummet. However, Safran’s highly profitable maintenance and spare parts sales activities are closely linked to aircraft flight cycles.

The group then took advantage of the recovery and growth in air traffic, notably through its joint venture with General Electric, CFM International. The latter markets the CFM56 engine, the best-selling engine in the world, whose gigantic installed base offers impressive after-sales revenue prospects. Especially since the Leap, a new generation engine, will gradually take over, with Safran starting to recognize benefits from this engine from 2025. In a recent note, Jefferies anticipated an average increase in Safran’s earnings per share of 21% per year over the period 2023-2028.

Schneider Electric is well placed in all three rankings: fifth over three years, second over five years, and fifth over 10 years. Having become the fourth largest capitalization in the CAC 40, the specialist in electrical infrastructure and energy efficiency technologies was driven by “mega-trends” such as electrification, “monitoring” (monitoring of consumption) of energy footprint and the rise of data centers. The group has also been able to add strings to its bow on the technological level, for example by purchasing Aveva, a specialist in industrial software.

The awakening of Publicis

We can also add Saint-Gobain, the big winner of the last two years on the stock market, to the list of these “quality” stocks. Saint-Gobain occupies eighth place in the top 10 over three years and third place in the ranking over five years. The group does not appear in that at 10 years but it only fails by a hair (11th with +133%). The company was driven by the strength of its profitability. Its operating margin is expected to break a record in 2024 despite a construction market still recovering in many regions. It is also reaping the benefits of its asset rotation policy which has led it to strengthen its presence in promising sectors such as construction chemicals.

The case of Thales (3rd, 9th and 8th in the three rankings) is a little different. The increase in its price has mainly been driven, in recent years, by the renewed stock market interest experienced by defense groups on the stock market due to the increase in geopolitical risks, particularly following the breakup of the war in Ukraine. In 2022 alone, Thales took 59.49%.

Although Publicis has not appeared in the top 10 over 10 years, the company has experienced an impressive stock market revival in recent years. The advertising and communications specialist has the fourth best performance in the CAC 40 over both three and five years.

The group led by Arthur Sadoun has, throughout the last two years, posted growth that has outpaced analysts and won significantly more contracts than its competitors. The company has benefited from its technological transformation, notably with the acquisition of Epsilon, a company specializing in digital marketing and data analysis. Although received with a little skepticism in 2019, this operation allowed Publicis to strengthen the relevance of its offer and offer its clients “large-scale personalization”, explained Arthur Sadoun in the fall.

Note that while certain stocks disappointed last year, their performance over ten years remains appreciable. This is the case of the tech groups STMicroelectronics, Dassault Systèmes, and Capgemini, respectively 7th, 5th and 9th performance in the CAC 40 over 10 years. But, in 2024, these groups had – again respectively – lost 46.35%, 24.4% and 16.21%.

We can also cite Airbus which issued a heavy warning on results in June, which had scalded a market. Over 10 years, Airbus has gained 241%, the sixth largest increase in the CAC 40.

Methodology notes: to establish these rankings, we based ourselves on the composition of the CAC 40 as it currently appears, and therefore including for example Bureau Veritas, the latest arrival in the Paris index, and not Vivendi. We compared current prices to prices on January 24, 2022, January 24, 2020 and January 23, 2015.