These European stocks are characterized by solid earnings growth, low volatility, high and stable margins, strong balance sheets and consistent dividend payments.
• European stocks have flown under the radar so far
• Promising stocks to diversify the portfolio
• Roche, ASML, Nestlé, Novartis, Novo Nordisk, LVMH and Sanofi at a glance
Away from the Mag Seven: seven promising European titles
The Magnificant Seven have recorded significant gains in recent months. And the growth path is not expected to end yet. According to “Investing”, experts from the US bank Goldman Sachs predict that the technology sector will continue to flourish in the long term. This is particularly true for the Mag 7, i.e. Alphabet, Amazon, Apple, Meta Platforms, Microsoft, NVIDIA and Tesla. So while things are likely to continue to improve for the big seven, some European companies have so far flown under the radar. Instead of big tech stocks like NVIDIA, Microsoft, Alphabet and Co., there are various stocks from different sectors in Europe that could be useful for diversifying your own portfolio.
In an article, “Investing” examines European companies that are characterized by solid profit increases, low fluctuations, high and stable margins, strong balance sheets and continuous dividend payments. A comprehensive analysis was carried out by applying Investing Pro’s “Fair Value”, which utilizes various proven financial models and is specifically tailored to the unique characteristics of these companies.
Roche shares
According to Investing Pro’s investment models, the Swiss pharmaceutical company Roche is undervalued by 37 percent. The risk profile shows good financial health with a value of 3 out of 5.
A closer look shows how the company positions itself in comparison to the market and the competition. Investing Pro, for example, points out that Roche is now worth 3.1 times its sales and 3.2 times the entire industry. The price-earnings ratio at which the share is traded is also over 16 times, above the industry average of -0.6x, which, however, indicates overvaluation.
In addition, Roche recently reported a difficult but nevertheless successful year in 2023. The company’s sales rose by one percent last year to 58.7 billion Swiss francs, thus exceeding the annual forecast, as can be seen from the corresponding announcement. Earnings per share also increased by six percent. In light of the positive business results, the board of directors therefore proposed an increase in the dividend to 9.60 francs.
ASML stock
According to Investing Pro’s investment models, Dutch chip-making equipment provider ASML appears to be overvalued by about 17 percent. Despite this overvaluation, the company has a very good financial rating of 4th out of 5.
A comparison of the share with the market and competitors confirms the expectations: There are currently many indications that the share is potentially overvalued. Currently, the stock trades at more than 12 times sales, while the industry average is 2.2 times. Additionally, the stock’s price-to-earnings ratio is 44.8 compared to the industry average of 11.6.
However, ASML can look back on a successful year. In 2023, sales grew from 21.17 billion euros to a whopping 27.56 billion euros, according to the company’s annual report. And the sales forecast for the current year is also promising. The company also plans to increase the total dividend for 2023 to 6.10 euros. For the previous year, ASML Holding paid 5.80 euros per share.
Nestlé shares
According to Investing Pro’s analysis models, Swiss food giant Nestlé currently appears to be undervalued by 12.5 percent. This is despite the fact that the risk profile shows solid financial health and is rated at 2 out of 5 points.
The stock’s current value is more than 2.5 times sales compared to an industry average of 0.9. The price-earnings ratio of the traded stock is 21.6, while the industry average is 11.7.
Last year, Nestlé generated sales of around 93 billion francs and, according to the annual report, achieved organic growth of 7.2 percent. Earnings per share also rose even more significantly in 2023 to 4.24 francs (+23.7 percent). The company has proposed a payout of 3 francs for the annual dividend, which means investors can expect a dividend increase of 1.7 percent.
Novartis
Novartis focuses on the research, development, manufacturing and marketing of various pharmaceutical products. According to Investing Pro’s valuation models, the stock is undervalued by 14.2 percent. The favorable risk profile with a rating of 4 out of 5 points also reflects the company’s excellent financial health.
A closer look at the comparison with the market and competitors shows that Novartis is worth 4.5 times its sales. This compares to an industry average of more than 3x. The price-earnings ratio of the traded Novartis share is 24.3, while the industry average is -0.6, which, however, indicates a possible overvaluation.
Novartis also recently reported a strong year in 2023. According to the annual report, net sales rose by eight percent to $45.4 billion. Earnings per share rose 49 percent to $4.13 in the same period. The company is proposing an increase of 3.1 percent to 3.30 francs per share for the dividend. And the growth prospects for the current year are also promising. The Swiss pharmaceutical group expects net sales growth in the mid-single-digit percentage range.
Novo Nordisk shares
Novo Nordisk, a company focused on drug discovery, development, production and commercialization, is overvalued by 17.8 percent, according to Investing Pro’s investment models. Despite this assessment, the company’s financial health is rated as very good at 4 out of 5 points.
A detailed analysis of relevant indicators shows that Novo Nordisk’s current value is more than 16 times its sales, compared to an industry average of 3.2 times. The price-earnings ratio of the traded stock is 45.4, while the industry average is -0.6, which emphasizes the extreme overvaluation.
Novo Nordisk was also recently able to convince with its business figures. The Danish pharmaceutical company increased its sales last year by 31.26 percent to 232.26 billion Danish crowns (DKK). Earnings per share increased by 52 percent to DKK 18.67 in 2023.
LVMH share
LVMH is a luxury group with activities in various sectors: wines and spirits, fashion and leather goods, perfumes and cosmetics, watches and jewelry, selective retail and other business areas. According to Investing Pro’s investment models, LVMH is overvalued by 11.7 percent. Nevertheless, the company has a reassuring risk profile and is awarded a very good financial health rating of 4 out of 5 points.
The metrics show that LVMH’s current value is 4.9 times its sales, compared to the industry average of 1.0 times. The price-earnings ratio of LVMH shares is 27.9, while the industry average is 10.1, which underlines the overvaluation.
LVMH has also recently had a strong balance sheet. Last year, the luxury group generated sales of 86.15 billion euros (+13 percent). Earnings per share rose by 8.21 percent to EUR 30.33 in the reporting period. In addition, the dividend is to be increased from 7 euros in the same period last year to 7.50 euros for 2023.
Sanofi shares
Sanofi, a healthcare company focused on the research, development, production and commercialization of therapeutic solutions, is undervalued by 23.7 percent, according to Investing Pro’s investment models. The low risk profile provides reassurance and the company’s financial health has an excellent rating of 4 out of 5.
A closer look reveals how the share is positioned in comparison to the market and competitors. Relevant indicators show that Sanofi is currently worth 2.3 times its sales, compared to the industry average of 3.2 times. The price-earnings ratio of the traded stock is over 19, while the industry average is -0.6, which confirms the undervaluation.
Sanofi also recently reported successful annual results. In 2023, the company achieved sales of 43.07 billion euros (+5.3 percent). Earnings per share rose by 5.4 percent to 8.11 euros in the same period. The company also proposed an annual dividend of 3.76 euros, an increase of 5.6 percent.
Editorial team finanzen.net
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