{"id":1460388,"date":"2024-03-02T14:20:00","date_gmt":"2024-03-02T19:20:00","guid":{"rendered":"https:\/\/bugaluu.com\/news\/?p=1460388"},"modified":"2024-03-02T14:20:00","modified_gmt":"2024-03-02T19:20:00","slug":"europes-super-stock-envy-feeds-mag-seven-monikers","status":"publish","type":"post","link":"https:\/\/bugaluu.com\/news\/europes-super-stock-envy-feeds-mag-seven-monikers\/1460388\/","title":{"rendered":"Europe’s Super-Stock Envy Feeds Mag Seven Monikers"},"content":{"rendered":"

Europe’s Super-Stock Envy Feeds Mag Seven Monikers<\/span><\/p>\n

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By Michael Msika, Bloomberg Markets Live reporter and strategist<\/em><\/p>\n

The US has the Magnificent 7 <\/strong>tech giants charming investors and driving up valuations. Europe \u2014 depending on which strategist you ask \u2014 has the Seven Wonders, the Super 7 <\/strong><\/em>or the GRANOLAS<\/strong>.<\/em><\/p>\n

The Mag 7 imitators highlight Europe\u2019s unfulfilled ambitions for its own supergroup of stocks. The continent\u2019s companies are hobbled by relatively lower earnings, sluggish economic growth and this cycle\u2019s heavy preference for US big tech \u2014 all curbing the Stoxx Europe 600\u2019s returns to about half of those on the S&P 500 in 2024<\/strong>. Nevertheless, Europe has some strong arguments.<\/p>\n

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\u201cThese monikers are a great way to remind investors that there\u2019s attractive stocks in Europe too, and at cheaper valuations than in the US,<\/em>\u201d says Citigroup strategist\u00a0Beata Manthey. As a consequence of the zero-rates era when US growth stocks were \u201cthe natural place to flock to,\u201d Europe now has solid, yet \u201cunderestimated\u201d companies, she says.<\/p>\n

The strategist adds that in contrast to the US, it\u2019s unusual for Europe to showcase a narrowing market \u2014 where growth is concentrated in a select number of stocks. This could be good news, however, as historically stocks tend to rise in the 12 months following narrowing episodes, albeit with higher volatility.<\/p>\n<\/p>\n

The US has the Magnificent 7 tech giants charming investors and driving up valuations. Europe \u2014 depending on which strategist you ask \u2014 has the Seven Wonders, the Super 7 or the GRANOLAS. The Mag 7 imitators highlight Europe\u2019s unfulfilled ambitions for its own supergroup of stocks. Beata Manthey, Citigroup Global Markets Global Equity strategist discusses with Francine Laqua on Bloomberg Pulse.<\/p>\n

As the market rally could stay narrow, Manthey has identified European megacaps who could be the continent\u2019s own Magnificent 7. Her \u201cSuper 7\u201d includes Novo Nordisk, ASML, LVMH, SAP, Schneider, Richemont, and Ferrari<\/em>. These stocks are cheaper than the Mag 7, offer similarly attractive margins and have underperformed the Mag 7 by 70% since the start of 2023, \u201cleaving room for catch-up,\u201d she says.<\/p>\n

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As shown in the chart above, seven stocks have accounted for nearly 70% of the Stoxx 600\u2019s 3.3% rally this year. Across the pond, the\u00a0Magnificent 7\u00a0account for 23% of the S&P 500\u2019s market cap and 50% of returns year to date. The US group is up 14% YTD, more than twice the return of the benchmark.<\/p>\n

In Europe, the list of would-be super-stocks varies from one strategist to another, with some core large caps always present. Societe Generale strategists, led by\u00a0Roland Kaloyan, have coined the \u201cSeven Wonders of Europe,\u201d including Novo Nordisk, ASML, LVMH, SAP, Siemens, Schneider and Hermes. It touts the \u201cearnings champions\u201d as global players with limited domestic exposure, which are more diversified than the Mag 7.<\/p>\n

SocGen strategists say the rising weight of megacaps is becoming an issue at the country level, as big stocks approach funds\u2019 limits. \u201cFew investors are comfortable with dedicating more than 10% of their funds to a single stock, if they are even allowed to, a threshold recently reached by ASML in the Euro Stoxx 50<\/strong>,\u201d they say.<\/p>\n

<\/a><\/p>\n

Europe\u2019s 10 largest caps now account for over 20% of the Stoxx 600, getting close to the peak of 22% reached during the tech bubble in 2000<\/strong>. While large caps have carried the benchmark\u2019s performance, European equities continued to suffer outflows, shedding $8 billions this year, while US peers gained $13 billion in inflows, EPFR Global data show.<\/p>\n

But let\u2019s give to Caesar what belongs to Caesar: Goldman Sachs strategists created a megacap acronym for Europe back in 2020, during the first lockdown. GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L\u2019Oreal, LVMH, Astrazeneca, SAP <\/strong>and Sanofi <\/strong>have since been the \u201cGRANOLAS<\/strong><\/em>.\u201d The group has performed like the Mag 7 since the start of 2022, with half their volatility, and are 30% cheaper.<\/p>\n

<\/a><\/p>\n

\u201cThe GRANOLAS exhibit qualities that we expect to predominate in this cycle: strong earnings growth, low volatility, high and stable margins, and strong balance sheet<\/strong>s,\u201d say strategists including\u00a0Guillaume Jaisson, who remain overweight the group. \u201cThey also stand to benefit from the structural shift toward passive investment and the lack of liquidity in the European equity market.\u201d<\/p>\n<\/div>\n

Tyler Durden<\/a><\/span>
\nSat, 03\/02\/2024 – 09:20<\/span><\/p>\n

\u200bRead More<\/a>\u00a0<\/p>\n

\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"

Europe’s Super-Stock Envy Feeds Mag Seven Monikers By Michael Msika, Bloomberg Markets Live reporter and strategist The US has the Magnificent 7 tech giants charming…<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1460388","post","type-post","status-publish","format-standard","hentry","category-news","wpcat-1-id"],"_links":{"self":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1460388","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/comments?post=1460388"}],"version-history":[{"count":0,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/posts\/1460388\/revisions"}],"wp:attachment":[{"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/media?parent=1460388"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/categories?post=1460388"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bugaluu.com\/news\/wp-json\/wp\/v2\/tags?post=1460388"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}