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MarketsFeb 23, 2024

Europe’s Magnificent 7 Has A Delicious Name, Strong Dividends, and A Good Value: Should You Buy?

Continental Markets

Noah Weidner

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America might have FAANGs, but Europe serves up something even more satisfying — GRANOLAS. But we’re not talking about the fiber-rich snack; we’re talking about 11 stocks that have become an essential part of Europe’s investing diet.

What’s in the mix? GRANOLAS is a basket of Europe’s most valuable stocks, mainly from the pharmaceutical and consumer goods sectors. Last year, these large-cap names made up over 60% of Europe’s STOXX 600 Index — and this year, they’re helping European markets book fresh all-time highs.

Over the past five years, several GRANOLAS, like ASML, Novo Nordisk, LVMH, and L’Oréal, have seen triple-digit returns — benefiting from trends such as semiconductor growth, weight-loss drugs, and demand for luxury goods.
Though some pharma giants like GSK, Roche, Novartis, AstraZeneca, and Sanofi have lagged due to post-COVID struggles, they’re now the cheapest in the group.

More bite for your buck

Some have compared GRANOLAS to America’s Magnificent Seven, but maybe it should be the reverse. Goldman Sachs’ Guillaume Jaisson says that GRANOLAS have outperformed the Mag7 with half the volatility. And in 2024, investors still have many reasons to snack on them.

Cheaper valuation: GRANOLAS trade at a price-to-earnings (P/E) ratio of 20x, below historical averages — and a 30% discount to the Mag7.
Strong dividends: GRANOLAS stocks pay an average dividend yield of 2.5% — significantly higher than the S&P 500’s 1.6% and Mag7’s 0.3%.

How GRANOLAS are made: These companies maintain high margins, robust financial positions, and strong earnings growth — which is impressive considering Europe’s economy took a massive beating in recent years. Looking closer, you’ll find that 80% of GRANOLAS’ revenues came from outside Europe. So, if you’re tired of FAANG talk, take a break and try some GRANOLAS.