Long abandoned, because of a disturbed political-economic environment-inflation, rates, war in Ukraine, sluggish growth …-Small and medium-sized enterprises (SMEs) and intermediate-size companies (ETI) listed in Europe could return to the front of the stage. Some signs are promising.
Financial flows are redirected to the old continent. The European scholarships have recorded, since the beginning of 2025, much better performance than their American counterparts. “At first, these investments promote large companies. Then, they are moving towards small capitalizations, underlines Guillaume Buhours, analyst and funding of funds at Gay-Lussac Gestion. The Caisse des Dépôts showed the way, by launching, at the end of 2024, a fund dedicated to listed SMEs-ETIs in the amount of 500 million euros.”
Stable and transparent management
If the timing seems good to invest in Small Caps, You still have to choose the most promising activity sectors and the least risky business profiles, because Euronext brings together more than 1,400 European SMEs. Compared to large groups, it is necessary to be even more vigilant in these choices, due to the higher risk of bankruptcy. The rule? Preferring profitable companies, whose growth in activity has been recurrent for several years and which display sufficient margin levels to generate liquidity. As for management, it must be stable and transparent on its objectives and the way of achieving them.
“At the sectoral level, we favor software companies like Cerillion, 74Software or Planisware; devalued companies, especially in leisure, such as Beneteau and Trigano; energy consumer groups, which will benefit from the drop in prices in the event of the end of the conflict between Ukraine and Russia, like the Special Gas producer; Defense like Theon, “explains Guillaume Buhours.
Investing yourself is not always easy. Very often, these small companies are less followed by financial analysts and less present in specialized publications. It is better to know how to read a balance sheet and a income statement to get an idea of the financial health of an SME. Otherwise, opt for specialized funds: their managers, with a commission, ensure the selection with the hope of great stock market performance because the current valuation of these companies is attractive.