3 of Europe’s ‘Magnificent 18’ Stocks That You Can Buy in the U.S.
UBS says investors should forget about the Magnificent Seven and look across the Atlantic to 18 European stocks they’ve highlighted that account for approximately 25% of the Stoxx Europe 600 Index, the exact weighting as the Mag 7 when initially conceived in 2023.
At least with the Mag 18, you have 18 choices rather than just seven. You could argue that all you need to do is invest in these 18 stocks, and you’ve got an excellent portfolio.
Is it enough to protect you against market downturns? No, probably not.
However, consider what UBS analyst Sutanya Chedda had to say on the subject:
“Returns from this group of stocks have been on par with the U.S. Magnificent Seven from 2021 to now, with Europe outperforming in 2022 when the U.S. had significant declines.”
The S&P 500 is up 7.8% year-to-date. Here are three of the Mag 18 stocks that outperformed the index in 2024 and should continue to do so in the years ahead.
Novo Nordisk (NVO)
Novo Nordisk (NYSE:NVO) is the star attraction of the Mag 18. If it were an S&P 500 stock, it would be the 57th-best performer over the past 12 months. That’s just outside the top 10%.
If not for the success of Ozempic and Wegovy, the Danish drug company’s performance wouldn’t have been nearly as impressive. Alas, to the victor, go the spoils.
Analysts are reasonably optimistic about its stock. Of the 32 that cover it, 21 rate it a Buy (65%), with a target price of $140.07, 10% higher than where it’s currently trading.
The consensus estimate for earnings per share in 2024 is $3.29, followed by $4.07 in 2025. In 2023, they were 18.62 Danish kroner ($2.68) per share, 52% higher than in 2022. So, analysts expect it to grow its EPS by 52% over the next two fiscal years.
While that’s about half its 2023 return, it’s still a very healthy two-year stack.
In March, the U.S. Food and Drug Administration approved Wegovy to reduce cardiovascular risk due to obesity. Given how many overweight people there are in America, it’s a logical label extension for the weight reduction drug.
Novo Nordisk has a long runway for these two drugs.
Hermès International (HESAY)
As luxury goes, I wanted to go with LVMH (OTCMKTS:LVMUY) because of all its great brands. However, down nearly 13% over the past year, effectively putting it out of the running, I went with Hermès International (OTCMKTS:HESAY), which is up 14.5% over the past year, and 256% over the past five years.
Hermès was founded in 1837 by Thierry Hermès, who started as a harness maker in Paris. In 1880, his son moved the workshop to larger quarters with a store that sold custom-made harnesses and saddles.
One hundred forty-four years later, it generated revenue of 13.43 billion euros ($14.40 billion) and an operating income of 5.65 billion euros ($6.06 billion). Revenues grew by 21% in 2023, excluding currency, while operating income rose 20.3% year-over-year.
In the past fiscal year, Hermès generated an adjusted free cash flow of 3.19 billion euros ($3.42 billion), 43% used for dividends and 4% for share repurchases.
On April 25, it reported Q1 2024 results that included a 17% increase in revenue. Winning categories included leather goods, ready-to-wear and accessories, and jewellery and Hermès home products.
Quality luxury products should continue to do better than most other price points in the future.
Total Energies (TTE)
Total Energies (NYSE:TTE) is one of the world’s largest oil and gas companies. Its shares are up 10% in 2024, 18% in the past year, and 34% over the past five years.
The company is considering moving its primary stock listing from Paris to New York to satisfy American institutional investors, who make up approximately 47% of its shares. OilPrice.com reported in late April:
“We are facing a situation where European shareholders, either they sell or maintain, and US shareholders are buying. So what is the most convenient for U.S. shareholders? Do they prefer to have the shares being primarily listed in New York or in Europe? I think when you ask the question, you have the answer.”
Total reported Q1 2024 results on April 26. Despite falling natural gas prices, it generated $5.1 billion in adjusted net income in the first quarter, $100 million higher than Wall Street’s estimate but 22% down from a year ago.
In the quarter, its daily oil production was 2.46 million barrels of oil equivalent (boe/d), helped by LNG (liquid natural gas) in new operations in Brazil and Nigeria. Planned maintenance will result in lower production year over year over Q2 2023.
Moving the primary listing should boost the price of its stock in the days following the move.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
