Before diving in, a word on the methodology. Each case study is based on 5 years of annual reports, and the selection relies on the following filters:
- Europe + United States: we stick to liquid, accessible markets that are easy for retail investors to trade.
- Market Cap < 20bn: this filter avoids heavily covered mega-caps.
- RSI 14: a momentum indicator calculated over 14 periods, measuring whether a stock is in a phase of strength or overbought. We keep it between 50 and 65 to ensure positive dynamics without excess.
- AR_CT: a rating measuring the consistency and strength of the short-term trend. Set at a minimum of 8/10 to select stocks with a clean recent uptrend.
- AR_MT: a rating measuring the consistency and strength of the medium-term trend. Set at a minimum of 9/10 to avoid simple short-term bounces and favor established trends.
- 20-day SMA: the 20-session simple moving average, providing the stock's short-term trend. We set it at 6/10 to verify that the price remains well-oriented in the short run.
- 50-day SMA: the 50-session simple moving average, providing a slightly longer and more stable trend. We set it at 5/10 to maintain a solid underlying trend without excluding stocks undergoing slight consolidation.
Watts Water: The equipment maker gaining on margins
Watts manufactures products that go unnoticed as long as they work. Backflow preventers, pressure regulators, valves, boilers, and water heaters; its business since 1874 has been to control and protect water and gas flows in buildings. A long-standing industry that has become more strategic as buildings grow more complex and the cost of water damage rises.
Growing at around 7% to 8% p.a., the top line does the work without overstretching. The stock's real engine lies elsewhere, in a transforming profitability. In 5 years, the gross margin has gained 7 points, from 42.4% to 49.5%, which is what converts moderate revenue growth into EPS that more than doubled, from $4.88 to $10.17 between 2021 and 2025. Two drivers are behind this move: pricing power first, and above all, a shift in the product mix toward high-end connected solutions capable of detecting leaks or freezing and automatically shutting off the water. Watts sells solutions, and that justifies its pricing power.
This quality is backed by a solid balance sheet, with a positive net cash position, and a dividend that has practically doubled in 5 years, from $1.01 to $1.99. The point of vigilance remains concentration: the Americas account for 76% of sales, while Europe is declining in organic terms.
This performance is also reflected in the share price, up nearly 14% since January. Q1 2026 extended the growth in adjusted earnings and sales without altering annual targets. Several brokers moved to a "buy" rating at the start of the year, two signals that fueled the momentum. With the stock trading at about 27x 2026 expected earnings and nearly 16.5x EBITDA, the market is already paying a premium for this consistency. Technical signals tell the same story: bullish in the short and long term, with the medium term simply taking a breather, according to our MarketScreener rating.
Indra: The Spanish champion buoyed by rearmament
Indra operates on two fronts. The first is a giant in IT consulting and services under the Minsait brand, which accounts for the bulk of the volume. The second is a strategic core of defense electronics and air traffic management, where the group features amongst the world leaders. A long-discreet business that our filter is now bringing into the spotlight.
The catalyst is geopolitical. By targeting defense spending at 5% of GDP by 2035, NATO has opened the floodgates for orders, and Indra is taking full advantage. Its defense backlog generates about €1.4bn in annual revenue, but it already has over 11bn in reserve, representing nearly 8 years of guaranteed production. A large portion of future growth is therefore already booked.
This mechanism drives profitability because defense operates in a different league than Minsait. It accounts for a quarter of sales but nearly half of the operating profit, with a margin well above the rest of the group. As it scales up, it has pulled the group margin from 7.5% to 9.5% in 5 years.
In recent weeks, Indra has secured multiple contracts in air traffic control and defense, from Nav Canada to control towers in Warsaw. Governance wavered in parallel, with the departure of the Chairman and then the CEO in May before the appointment of a new head. The stock held firm, up nearly 12% since January after gaining 186% in 2025.
Then there is the price. At around 20x 2026 expected earnings and nearly 10x EBITDA, the rearmament play is already well-priced, especially since recent earnings owe much to scope effects and customer prepayments. On the technical side, the short term remains in control, while the medium and long term lag slightly behind.
PriceSmart: The Costco of Latin America
PriceSmart has taken a winning recipe and implemented it where no one else had. The group operates membership warehouse clubs, Costco-style, but in markets that the American giants ignore: 56 clubs spread across a dozen countries in Central America, the Caribbean, and Colombia. Customers pay an annual fee to buy in bulk at discount prices in regions where organized retail remains underdeveloped and the middle class is expanding.
The entire appeal of the model lies in this membership fee. Selling merchandise yields little, with a structurally low gross margin around 15.7%, as the principle is to sell at the lowest price. The real profit comes from the subscription, a recurring revenue stream that flows almost entirely to the bottom line. It accounts for only 1.6% of revenue, but its growth, from $56m to $86m in 5 years, directly fuels profitability. Most importantly, the renewal rate has reached 88.8%, and the share of Platinum members, who spend more and show higher loyalty, continues to rise. This is the hallmark of a captive customer base.
This mechanism is reflected in the consistency of the accounts. Revenues have grown from $3.6bn to $5.3bn since 2021, driven as much by club openings as by solid comparable sales, up 6.7% in 2025, proving that growth is primarily organic. EPS has followed suit, rising from $3.18 to $4.82 in 5 years, supported by a healthy balance sheet with a positive net cash position.
Club openings are continuing apace, from Guatemala to the Dominican Republic, and the second quarter of 2026 showed growth in both earnings and sales. The stock followed, up more than 40% since January. All three technical horizons point in the same bullish direction. This is a consistency for which the market charges a high price: approximately 3120x 26 expected earnings and nearly 14x EBITDA.
