While many of the world’s investors remain focused on "The Magnificent Seven" — a group of tech stocks that significantly outperformed in 2023 — a small group of European stocks has quietly outperformed most of the world.
Based on the first letters of their names, Goldman Sachs dubbed this group “Granolas,” and it accounted for 50% of gains of the Stoxx Europe 600 Index for the past year.
Who are the Granolas?
Granolas refers to a group of 11 European stocks operating in the healthcare and pharmaceutical sector, with an addition of luxury, consumer staples, industrial manufacturing and software technology. They include:
GSK plc (NYSE:GSK): The pharmaceutical company, founded in 1715, operates through four segments: Pharmaceuticals, Pharmaceuticals R&D, Vaccines, and Consumer Healthcare. The company's arguably most famous product is pain reliever Advil. Its stock trades at 13.8x the earnings — below the industry's average. It pays a 3.5% dividend with a reasonable 48% payout ratio. One potential weakness is its high level of debt, which grew during the COVID-19 pandemic but has been improving over the last two years.
Roche Holding AG (OTCQX:RHHBY): The Swiss pharmaceutical giant touts over 100,000 employees and has a broad portfolio of products, including in vitro tests for various diseases such as cancer, diabetes, COVID-19 and others. It boasts a healthy 19% profit margin and a price-to-earnings ratio 16.1x, which is well below the industry average. The company, founded in 1896, pays a stable and growing 4.1% dividend with a reasonable 67% payout ratio. Its debt-to-equity ratio has doubled from 40% in 2019 to over 80% in the aftermath of the COVID-19 Pandemic.
ASML Holding N.V. (NASDAQ:ASML): Dutch developer, producer and seller of advanced semiconductor equipment systems for chipmakers. It is a key company in the global semiconductor supply chain and the only company capable of supplying extreme ultraviolet lithography technology. This technology is crucial for producing the most advanced microchips with nodes as small as 7,5 or 3 nanometers. A single machine costs more than $200 million. Its stock trades at 43.4x its earnings. The company has a net profit margin of over 28% but pays a minuscule dividend of 0.7%. It has an excellent balance sheet, with cash exceeding the debt by almost 50% and a forecasted annual growth of 15.6%.
Nestlé S.A. (OTCPK:NSRGY): The food and beverage conglomerate has over 270,000 employees and operates household brands such as Nescafe, Nespresso, Maggi, Thomy and Hot Pockets. Its stock ...Full story available on Benzinga.com
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