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Beyond the Magnificent 7, These European Giants Keep Soaring Under the Radar

Published 04/03/2024, 15:45
Updated 02/09/2020, 07:05
  • 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. Learn more here>>

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:

  • 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%

Now, let's take a look at each company individually and analyze their prospects for the rest of the year.

Roche

Roche, 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.

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Roche Vs. Peers

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.

ASML

ASML, 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.


ASML Vs. Peers

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.

Nestle

Nestlé, 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.


Nestlè Vs. Peers

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.

Novartis

Novartis, 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.

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Novartis Vs. Peers

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.

Novo Nordisk

Novo 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.


Novo Nordisk Vs. Peers

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.

LVMH

LVMH 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.


LVMH Vs. Peers

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.

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Sanofi

Sanofi, 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.


Sanofi Vs. Peers

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.

Conclusion

In 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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Disclaimer: This article is written for informational purposes only; it does not constitute a solicitation, offer, advice, or recommendation to invest as such it is not intended to incentivize the purchase of assets in any way. I would like to remind you that any type of asset, is evaluated from multiple points of view and is highly risky and therefore, any investment decision and the associated risk remains with the investor.

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