Since a few months the deal however is changing

In the movement to increase that companies have their price "pricing power" or "market power" in the vocabulary specialized stock market had become a discriminating criterion. While margins were attacked from all sides (energy costs, raw materials, packaging), investors monitored much more closely to custom the ability of companies to pass on increases in costs of production on their final rates.

Since a few months, the deal however is changing. If the oil has lost more than 20 dollars per barrel between July and October, other raw materials were corrected, as rubber, gold, copper and even sugar, whose course was singed in 2005. So far, these reflux, be they temporary or durable, do not call into question the interest of this "pricing power".

The increase in raw materials is indeed, an exogenous shock among many others in the same way as, for example, wage pressures and adverse currency parities. Laurent Berrebi, an economist at Groupama Asset Management, cited the case of retail in the United States. "Us household consumption has remain steady, the power of the market in this sector has dwindled to the sharp increase in the cost of labour," illustrates. "Alone in the third quarter of their wage costs have as in most American companies increased by 4 in annualized pace, while retail prices have increased by only 1.2. And, in view of the strong competition of the distribution in the US, companies are not able to impose increases in tariffs.

The interest of "pricing power" is situated mainly at the level of visibility. Investor in shares, it provides a guarantee of strong results and, by extension, security and lower volatility of the investment. "Invest in a company with a low"pricing power"involves taking a macroeconomic bet", explains Cédric de Fonclare, Manager of the FCP Central growth Europe in Jupiter Asset Management. "But the risk of error is higher on a society which, through a technology or a commercial positioning, has a"pricing power"to grow regardless of the situation."

"Market power".

For the Economist, this "pricing power" offered no less an indication of the strength of the growth of the results of a sector to another. "Currently this market power is especially marked in intermediate goods (processed metals, plastics, paper)." In euro-zone, the utilization rate of production capacity, which is the best instrument for measuring is there monte 84.7 against an average 82 long term. It is still stronger in industrial equipment goods, where the utilization rate reached 87.5 against an average long term of 82.5. However control of prices in these sectors confirms the scenario of a recovery of the investment cycle.

If "market power" is the subject of a broad consensus in the financial community, managers not granted him but not the same place in their investment process. Gérard Moulin, Manager of FCP Delubac Exceptions to Bank Delubac, indeed as the centrepiece of its management. To after him, "the companies are currently facing four challenges structural on the price front: competition from countries with low production costs, the trivialization of the Internet, which promotes transparency on prices, the infidelity of consumer brands and the fierce competition between companies on the new growing markets." But these pressures can easily challenge of competitive positions. In the television sector, for example, Samsung trimmed the market shares of Sony, by practising a lower prices with higher margins through lower production costs. By contrast, the pressure on prices has greatly reduced the duration of amortization of the cost of research and development incurred by Sony. Technological jump to another, force could again change. But, for the investor, these pressures on prices translate into greater uncertainty on the profitability for long-term investments.

Starting from this analysis, Gérard Moulin has chosen to invest exclusively in companies capable of permanently protecting their positions through the mastery of their prices. It supports example FedEx, which has managed to raise its rates three times in 2006 to compensate for the increase of kerosene (which represents 17 of its operating expenses), and Harley-Davidson. "On the market of the 650 cm3, competition from low-cost countries is marginal, because the purchase of this type of motorcycle is not motivated by price but by the image, which does not the day to the next build." And when even the constructor within its rates, the fidelity of its customers is not started. This mastery of its market gives it a high visibility on its growth. The Group also recently unveiled figures forecast of earnings per share by 2009.

For the majority of the managers, "pricing power" however is a determinative but unique visibility factor in their choice of investments. They are not more offensive use. As summarised Cédric de Fonclare. "In the funds that I pilot, he said, I tend to prefer companies whose"pricing power"is sustainable, particularly because they operate on oligopolistic markets, as is the case of Neopost or Essilor." Nevertheless, I do me banned not to invest in companies which market power is more stable, as is currently the case for petroleum services. I have particularly selected Tenaris, the competitor of Vallourec. When this sector reaches its top of cycle, rates will again drawn down and, at this stage, control of their prices will be even more critical. But in the meantime, the imbalance between supply and demand is such that the investor has a relative visibility. Plants turning at full speed while the oil majors have no other choice but to increase their investment budgets to renew their reserves.