Fortune favours the bold: Spanish SMEs defied recent history to post good results almost across the board, surprising both us and consensus to the upside, as restructuring bore fruit and with some semblance of normality returning. We now turn to 2021 to see whether the recent catch-up with European mid-caps could prove durable. Our Top Picks: We add Applus to Gestamp, Logista and CAF. A complicated quarter, but a good one Because of the way covid impacts fell in both Q1 20 and Q1 21 comps are tricky, but the overall picture is healthy. On aggregate, organic growth was up 7%, while tough restructuring measures taken by many companies in 2020 led to EBITDA margins widening by 50bp vs Q4 20. For the first time we can remember for many Q1s, guidance was also increased by several companies (CIE Automotive, Fluidra and Logista), with others hinting strongly that if trends continue it will only be a matter of time before they follow suit (Gestamp, Indra, Rovi and Almirall). Catching up with Europe On a relative basis, since November 2020, Spanish mid-caps have caught up with European peers, having lagged through 2020. However, while further outperformance is on the cards in 2021, we still believe a discount to European mid-caps is justified given weaker forecast growth for the Spanish economy. Our top picks: Applus, CAF, Gestamp and Logista We add Applus to our list of top picks as we expect business mix, corporate transactions and gradual results improvements to fuel a change in investor sentiment. Meanwhile, CAF (strong backlog execution with growing margin, and trading at cheap multiples), Gestamp (outgrowing the market and very likely to beat guidance) and Logista (still delivering growth, looking for an acquisition and trading at 8% FCF yield) all remain on our list of top names.