Beyond the Magnificent 7, These European Giants Keep Soaring Under the Radar
Investing.com | Mar 04, 2024 09:45AM ET
- As the US magnificent 7 keep rallying, some European giants have flown under the radar.
- While tech companies dominate the magnificent 7, the European stocks offer diversification to different sectors.
- In this piece, we will take a look at the valuations and the financial health of these companies.
- In 2024, invest like the big funds from the comfort of your home with our AI-powered ProPicks stock selection tool.
- Roche Holding (OTC:RHHBY) - undervalued - up +37%.
- ASML (NASDAQ:ASML) ) - overvaluation - down by -17%
- Nestle (OTC:NSRGY) - undervaluation - up +12.5%
- Novartis (NYSE:NVS) ) - undervaluation - up +14.2%
- Novo Nordisk (NYSE:NVO) - overvaluation - down -17.8% decline
- LVMH (OTC:LVMUY) - overvaluation - down by -11.7%
- Sanofi (NASDAQ:SNY) - undervaluation - up +23.7%
Goldman Sachs predicts that the tech sector will continue to thrive in the long term, particularly the magnificent 7.
In contrast, Europe is expected to see positive returns through a mix of sectors. In this piece, we will focus on European companies with robust earnings growth, low volatility, high and steady margins, strong balance sheets, and consistent dividends.
Utilizing Investing Pro's Fair Value, which uses various established financial models tailored to the unique attributes of these companies, we conducted a detailed analysis and came up with the following data:
Now, let's take a look at each company individually and analyze their prospects for the rest of the year.
h2 Roche/h2Roche, a research-based healthcare company, is undervalued by 37% according to Investing Pro's investment models. The risk profile shows a good financial health level, with a score of 3 out of 5.
Source: InvestingPro
Delving deeper, we can see how it compares with the market and competitors, considering the best-known indicators, that Roche is now worth 3.1x its revenues compared to the industry's 3.2x, and the Price/Earnings ratio at which the stock is trading is more than 16 times against an industry average of -0.6x, which stands to highlight its overvaluation.
h2 ASML/h2ASML, a manufacturer of chip-making equipment, appears to be overvalued by 17% according to Investing Pro's investment models. However, the company has a very good financial health rating of 4 out of 5.
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Source: InvestingPro
Comparing the stock with the market and competitors, we have the confirmation we expected, the stock currently has a potentially overvalued valuation.
Today it is worth more than 12 times its revenue compared to 2.2x in the industry, and the Price/Earnings ratio at which the stock is trading is 44.8X against an industry average of 11.6x.
h2 Nestle/h2Nestlé, a food, health, and wellness company, appears to be undervalued by 12.5% according to Investing Pro's investment models. But the risk profile shows decent financial health, scoring 2 out of 5.
Source: InvestingPro
Comparison with the market and competitors sees the stock at a potentially overvalued valuation.
It is worth more than 2.5 times its revenue compared to 0.9x for the industry, and the Price/Earnings ratio at which the stock is trading is 21.6X against an industry average of 11.7x.
h2 Novartis/h2Novartis, which specializes in the research, development, production, and marketing of a range of pharmaceutical products, is undervalued according to Investing Pro's investment models by 14.2% and the low risk profile is positive, has excellent financial health, with a score of 4 out of 5.
Source: InvestingPro
Delving deeper, we can see how it compares with the market and competitors, considering the best-known indicators, that Novartis is worth 4.5 times its revenues compared to more than 3 times in the industry, and the Price/Earnings ratio at which the stock is trading is 24.3x against an industry average of -0.6x, which stands for a possible overvaluation.
h2 Novo Nordisk/h2Novo Nordisk, a company involved in the discovery, development, production, and marketing of pharmaceuticals, is found to be overvalued according to Investing Pro's investment models by 17.8%. But it has a very good financial health rating of 4 out of 5.
Source: InvestingPro
If we again look at the best-known indicators, we can see that Novo Nordisk is now worth more than 16 times its revenues compared to 3.2x in the industry, and the Price/Earnings ratio at which the stock is trading is 45.4X against an industry average of -0.6x, which stands to highlight its extreme overvaluation.
h2 LVMH/h2LVMH is a luxury group active in six sectors: Wines and Spirits, Fashion and Leather Goods, Perfumes and Cosmetics, Watches and Jewelry, Selective Retailing, and Other Businesses. It is found to be overvalued according to Investing Pro's investment models by 11.7 percent but is reassuring in its risk profile, and has a very good financial health rating of 4 out of 5.
Source: InvestingPro
Delving deeper, we can see how it compares to the market and competitors, considering the best-known indicators, that LVMH is worth 4.9 times its revenue compared to the industry's 1.0x, and the Price/Earnings ratio at which the stock is trading is 27.9x against an industry average of 10.1x, which stands to confirm its overvaluation.
h2 Sanofi/h2Sanofi, a healthcare company engaged in the research, development, production, and commercialization of therapeutic solutions, is found to be undervalued according to Investing Pro's investment models by 23.7 percent and the low risk profile is reassuring, it has an excellent level of financial health, scoring 4 out of 5.
Source: InvestingPro
Delving deeper, we can see how it compares with the market and competitors, considering the best-known indicators, that Sanofi is now worth 2.3x its revenues compared to the industry's 3.2x, and the Price/Earnings ratio at which the stock is trading is more than 19 times against an industry average of -0.6x, which stands to confirm the undervaluation.
h2 Conclusion/h2In conclusion, Novartis and Sanofi boast various strengths, including a decent Fair Value, positive outlook, and strong financial health. This suggests that these stocks could provide satisfactory returns.
On the other hand, Roche and Nestlé, despite having a bullish Fair Value compared to the current price, exhibit signs of financial strain, resulting in double-digit negative performance over the past year.
Moving to ASML, Novo Nordisk, and LVMH, these companies display robust financial health and distinct strengths, instilling confidence in investors for the continuation of the current positive trend.
However, it's important to note that a short-term correction could be likely, considering the substantial gains of the first two stocks discussed as they have seen increases of +51.6% and +68.6% over the past year.
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