The Most Stable CAC Shares Over Time
What is the CAC 40?
According to Euronext Paris market capitalization, the CAC 40 tracks the 40 largest French stocks. In December 1987, the CAC 40 began with a base value of 1,000 and operated on a total market capitalization system until 2003, when it changed to a free-float adjusted method.
- Euronext Paris’ CAC 40 index gives a general overview of the public companies listed on Euronext.
- Based on market capitalization, trading activity, balance sheet size, and liquidity, the index includes the largest 40 listed companies in France.
- The CAC 40 is the most popular European index for foreign investors due to its international reach.
Understanding the CAC 40
Cotation Assistée en Continu, which translates to “continuous assisted trading”, is a benchmark index used by French equity funds. In addition, it provides a general picture of Euronext Paris, France’s largest stock exchange formerly called the Paris Bourse.
Like the Dow Jones Industrial Average (DJIA), it represents the overall level and direction of the market in France. In terms of liquidity, the CAC 40 index represents the 40 largest stocks listed on Euronext Paris and includes such companies as L’Oreal, Renault, and Michelin.
An independent steering committee reviews the CAC40 index composition on a quarterly basis. According to free-float market capitalization and turnover at the end of the previous year, the committee ranks companies listed on Euronext Paris at each review date. Only the 40 most actively traded companies are included in the CAC 40.
Impact of CAC 40
Euronext, the cross-border European stock exchange, maintains the CAC 40 as one of its main national indices. In 2000, the Amsterdam, Brussels and Paris stock exchanges merged and formed Euronext. After that, in 2007, Euronext merged with NYSE Group to create NYSE Euronext.
How to invest in CAC 40 Index (France 40)?
You can trade and invest in French stocks and the CAC 40 index in three ways. These are available to both local and international investors:
By investing in CAC 40 ETFs
The CAC 40 can be tracked through an Exchange Traded Fund (ETF). There are a lot of popular ETFs that track the CAC 40, including Lyxor CAC 40, Amundi CAC 40, and HSBC CAC 40.
By CFD Trading
Investors from abroad can also benefit from CFD trading. A CFD (Contract for Difference) can be traded online using brokers such as 8cap. With a CFD broker, you can trade European stocks just like those listed on the CAC 40 or Fra40 even if you do not live in Europe.
By investing in the best blue-chip stocks on the Euronext stock exchange
If you would like to invest directly in the CAC 40 index or French stocks, you can do so by investing through Euronext. You must meet the eligibility requirements to open an account. The shares of the blue-chip company you select can then be purchased through the CAC 40 index.
In the Wines & Spirits segment, the company produces and sells high-quality champagnes and sparkling wines. The company distributes vodka and white liquor as well.In the past decade, LVMH has grown steadily thanks to its presence in all five major luxury markets: wines and spirits; fashion and leather goods; perfumes and cosmetics, as well as watches, jewelry, and selective retail.
Furthermore, it has acquired advantageous companies, such as Bulgari and Tiffany & Co., and has greatly increased the watch and jewelry segment’s revenues as a result. Although LVMH trades at a premium, the global economy is seeing growth in the high fashion sector as a whole. Growth in the high-fashion segment has been fueled by a growing middle class who enjoys fashion, particularly in China.
As a subsidiary of TotalEnergies, TotalQaudran develops, operates (and builds) renewable energy products both in France and worldwide.
According to Total Quadran’s website, the company operates over 340 renewable energy plants (including 224 solar plants) in France, totaling almost 1000 MW, generating 1,765 GWh of renewable electricity annually. “This is the equivalent of the annual consumption of nearly 1 million people and annual savings of nearly 130,000 tons of CO2 emissions.”
Final Thoughts
Those companies are probably performing in the most stable way possible on the French market. They are enjoying the benefits of extremely strong fundamentals. Revenues are growing and forecasted to continue to grow, the EPS is climbing, and the Covid pandemic hasn’t hurt the results for more than one year. In addition, they are enjoying strong support from the shareholders and trust from the public market.