European companies who increased spending to take advantage of slight growth improvements instead of cash hoarding or distributing it to shareholders were rewarded by investors.
This could mean that in the future, brave strategies will more than likely result in better returns and investor equity allocations. These strategies involve using strong cash positions to make more practical and essential investments.
Four out of five companies surveyed by a Thomson Reuters StarMine study performed better than the set country benchmark indices within the last 90 days. These companies included in the listing have increased capex by half of their original value from one year earlier.
"During 2011 there was no link between capex spending and price performance," said Peter Oppenheimer, an analyst at Goldman Sachs said. "It now appears that companies are seeing greater reward for increasing their capex," he added.
"The pattern of improved performance for companies that are being more proactive with their cash is an encouraging trend and one that should continue to support rising shareholder returns," summed Oppenheimer.
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