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Attractive European Stocks to Consider Heading Into 2019

Dec 28, 2018

Better Data for Better Investment DecisionsBetter Data for Better Investment Decisions


Last week in the article titled, "Where to Hunt for Treasures in European Stocks," Barrons highlighted four European stocks for investors to consider while citing oversold technical signals for the Euro Stoxx 600 Index. As of yesterday's close, the Euro Stoxx 600 is down 15.31% YTD.  In light of this, we want to highlight a few European stocks that are “Top Buys” in our European Global Top Stock Idea Models: 

  • Unilever N.V. (ENXTAM: UNA), the Netherlands-based consumer goods producer with operations in personal care, home care, foods, and refreshments, maintains an extremely attractive LTM ROE of 44.0% that far exceeds the Euro Stoxx 600’s aggregate LTM ROE of just 12.23%. Additionally, Unilever is more profitable than the average constituent of the Euro Stoxx 600 as it maintains a gross margin of 41.6% and a profit margin of 11.4% while the Euro Stoxx 600’s aggregate gross margin is just 30.3% and its aggregate profit margin is 8.2%.
  • Unilever is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.
  • Shire Plc (LSE: SHP), an Ireland-based biotechnology company, trades at an NTM P/E of 11.20x, slightly cheaper than the Euro Stoxx 600’s NTM P/E of 12.54x. Although Shire is expected to grow its long-term EPS by just 6.58% while analysts expect aggregate long-term EPS growth of 7.2% from the Euro Stoxx 600, Shire’s profitability eclipses that of the Euro Stoxx 600 -- Shire generated a gross margin of 70.9% and a profit margin of 30.6% over the last twelve months while the Euro Stoxx 600 observed an aggregate gross margin of 30.3% and an aggregate profit margin of 8.2% over the last twelve months. 
  • Shire is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas and “Top Buy” in our United Kingdom All-Cap Global Top Stock Ideas.


Source: Capital IQ


  • Analysts forecast Adidas AG (DB: ADS), a global producer and manufacturer of athletic and sports lifestyle products, to generate robust long-term EPS growth of 17.7% while the Euro Stoxx 600 is expected to observe long-term EPS growth of just 7.2%. Adidas has displayed an ability to improve its profitability over the last 5 years, consistently increasing its gross margin y/y from 47.6% in FY2014 to 51.7% in FY2018 -- as previously stated, the Euro Stoxx 600 maintains an aggregate gross margin of just 30.3%.  
  • Adidas is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.
  • AB Volvo (OM: VOLVB), the Swedish auto manufacturing giant, trades at a cheap forward multiple of just 9.39x its NTM earnings while the Euro Stoxx 600’s aggregate NTM P/E is more expensive at 12.54x, as previously stated. Despite the cheaper forward trading multiple, analysts expect higher long-term EPS growth of 11.98% from Volvo compared to just 7.2% long-term EPS growth from the Euro Stoxx 600.
  • Volvo is rated “Top Buy” in our European Large-Cap Global Top Stock Ideas.



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Global Top Stock Ideas