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They should never be missing from the table of every good investor, as in every healthy “breakfast” you respect. At least according to Goldman Sachs, which in the midst of the pandemic, in 2020, coined the acronym Granolas (just like the mix of cereals and oat flakes consumed at the beginning of the day) to identify the 11 best European stocks by market value in that moment. These are GSK, Roche, Asml, Nestlé, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, Sap and Sanofi. A “recipe” which now, according to analysts, has the potential to beat even the big names in Silicon Valley and US Tech. Indeed, from a global point of view, explains the bank, Granolas have even already outperformed the best Californian stocks in the last two years.
Granolas – says Goldman Sachs – represent about a quarter of the market value of the Stoxx 600, a share similar to the combined market value of the Energy, Basic Resources, Financial Services and Automotive sectors. «From a European perspective – they explain – they contributed to 60% of the total earnings of the last year. They are a significant factor in why the European stock market has performed strongly despite the region’s moderate gross domestic product growth.” What attracted the interest of Goldman Sachs, however, is the growth potential of Granolas in the current difficult economic scenario and above all the lower prices at which these securities are currently traded, in comparison with the similar group of shares excellence created by Goldman for the US market, called The Magnificent Seven (includes Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms, Tesla), of which Europeans have kept pace until today. «The Granolas – observe the analysts – present advantageous characteristics in this cycle: robust profit growth, stable price trends, consistently high profit margins and solid financial positions». The price of these 11 stocks is in a high range today, with a price-to-earnings ratio of 20 times. But the point of interest, according to Goldman Sachs, is given by the fact that the prices today have a price 30% lower than those of the Magnificent Seven, which instead discount a p/e of 30 times, and their current price levels are lower at the historical average discount. «The general expectation – analysts report – is that these companies will continue their strong growth, with a forecast of +7% per year in revenues until 2025, compared to less than 2% for the rest of the market excluding Granolas» . This suggests that they will be responsible for almost all of the Stoxx 600’s revenue growth in Europe. «It is likely – concludes the analysis – that this growth is driven by companies with high barriers to entry into the market, solid financial foundations and reinvestments in R&D and capital expenditure linked to growth; choices similar to the investment strategies of the Magnificent Seven”.