Best European Stocks To Buy: When you think of Europe, croissants, french press coffee and Buckingham Palace might be the first images that crop up, but which stocks jump out at you as worth buying?
While Europe gets a rough ride from some Americans for favoring socialism over capitalism, the top European stocks are behemoths that spit out profits as well as any Fortune 500 American company. Here are a handful of the very best companies in Europe.
Nestlé Growth and Dividends Are Compelling
Nestlé S.A. [OTC: NSRGY] is a Swiss multinational nutrition, health, and wellness company. The largest food company in the world, Nestlé has a presence in over 190 countries and employs around 340,000 people.
The company’s product categories include baby food, medical food, confectionery, prepared dishes, dairy products, ice cream, chocolate, frozen food, pet foods, and nutrition and breakfast cereals, among others.
The owner of 29 renowned brands such as Nestlé Baby & Me, Neslac, Nescafé, Kit Kat, Maggi, Perrier, etc., has an annual sales of over US$1.1 billion. It is also one of the main shareholders of French-based cosmetics manufacturer L’Oreal, which is one of the world’s largest cosmetics companies.
Nestlé [VTX: NESN] exhibits a considerable number of business advantages. The food and beverage conglomerate, which received $10 billion in cash from the sale of its Skin Health division in October 2019, announced a share buyback program worth 20 billion Swiss francs ($20.2 billion) by 2022.
The company may also issue special dividends over the next three years, which increasingly attests to CEO Mark Schneider’s determination to boost the company’s value to shareholders.
At the end of 2019, the food and beverage conglomerate also completed the CHF 20 billion share buyback program initiated in July 2017. For the year ending 2019, total reported sales increased by 1.2% to CHF 92.6 billion from CHF 91.4 billion in 2018. Shares are up 45% over the past three years.
In addition, the company proposed dividend increase of 25 centimes to CHF 2.70 per share, marking 25 consecutive years of dividend growth.
Also, demand for food products tend to outperform the broader market even during periods of decline as people do not cut down on their eating.
Nestlé’s huge array of products ensures it provides virtually every household with something it needs.
Moreover data suggest that sales of packaged food products worldwide are estimated to hit $2.6 trillion by the end of 2019, and the Swiss company is the biggest in the business.
It is uncommon to find a company with a strong dividend, a high moat, and stellar growth potential. The Swiss conglomerate has all three, which makes it one of the best blue chip dividend stocks.
Roche Holding New Medicines Fend Off Competition
Roche Holding AG [VTX: ROG] is a Swiss multinational healthcare company that operates worldwide under two segments: Pharmaceuticals and Diagnostics.
The Pharmaceutical segment produces prescription drugs in the areas of oncology, respiratory diseases, dermatology, metabolic disorders, immunology, ophthalmology, infectious diseases, transplantation, and neuroscience.
The Diagnostic segment refers to the diagnosis of diseases through an in vitro diagnostics process. The Basel, Switzerland-based company is the second largest pharmaceutical company worldwide.
It controls the American biotechnology company Genentech, Japanese biotechnology company Chugai Pharmaceuticals, as well as the United States-based Ventana Medical Systems.
Shares of Roche Holding [VTX: ROG] climbed about 27% in 2019, with an increase in sales and profit too.
The drug maker remains upbeat about future prospects despite competition from cheaper copies called biosimilars, especially in the U.S.
The company lost an estimated 1.5 billion Swiss francs ($1.54 billion) in 2019 to biosimilars and it may climb to 4 billion francs this year as per its CEO Severin Schwan.
Irrespective of it, the Swiss drug maker’s net income rose 30% to 14.11 billion Swiss francs ($14.48 billion) for the year ending 2019 in comparison to CHF 10.87 billion in 2018, on rising sales that increased 8.1% to CHF 61.47 billion.
Roche expects its next-generation medicines, which include Hemlibra for hemophilia, Ocrevus for multiple sclerosis, and cancer drugs Tecentriq and Perjeta, to continue fueling growth and help it transition away from aging cancer blockbusters like Herceptin and Avastin.
The company, which recently sealed a $4.8 billion acquisition of Spark Therapeutics remains upbeat about its new guard of medicines including gene therapies to boost its sales and profitability.
Fast Growing Drugs A Boon For Novartis
Novartis International AG [NYSE: NVS] is a Swiss multinational pharmaceutical company which researches, manufactures, develops, and markets pharmaceutical and consumer healthcare products. It is one of the largest pharmaceutical companies by both market capitalization and sales.
The company’s segments include Innovative Medicines, Sandoz (generics), and Alcon (eye care). The company’s products include drugs related to ophthalmology, metabolism, neuroscience, immunology, hematology, oncology, dermatology, gastrointestinal and hormonal therapy, respiratory, cardio-metabolic, pain, and respiratory and central nervous system, among others.
The Basel, Switzerland-based company holds 33.3% of the shares of Roche Holding AG [VTX: ROG], though it does not exercise control over Roche.
The pharmaceutical giant performed well in 2019 and the company expects sales in 2020 to grow by a mid- to high-single-digit percentage. Shares of the global healthcare company gained about 23% over the past year.
The company lagged behind competitors like Amgen, though it outperformed rivals like Johnson & Johnson. Its blockbuster leukemia drug Gleevec is losing market share, though its top-performing drug in terms of sales revenue, Cosentyx, has been reporting booming sales.
The sales of the drug used for axial spondyloarthritis treatment, surged 31% in comparison to 2018, having risen to $858 million in Q2 2019. In the second quarter, sales of Gleevec declined by 19% to $323 million.
The pharma giant has a number of promising drugs in the pipeline. Zolgensma, the company’s $2.1 million gene therapy, approved in the U.S. last May, garnered $186 million for the quarter. This despite the accusations that Novartis scientists had been falsifying data in the FDA application for Zolgensma.
It recently announced positive phase 3 clinical trial results for a drug candidate called Kisqali, an endocrine therapy for women with advanced postmenopausal breast cancer.
Reports suggest that the global breast cancer drug market will reach $38.4 billion by 2025. This leaves enough room for large firms like Novartis to capture a sizeable market share despite heating competition.
Additionally, results from a study of Entresto, a drug that improves heart structure and function in patients with cardiovascular disease showed encouraging signs for the company.
All in all, the future prospects look bright for Novartis. The majority of the company’s drug therapies are witnessing stellar growth, which more than sufficiently makes up for the drugs that are proving to be a laggard.
And with its new breast cancer drug on the horizon, experts believe that Novartis is in for some impressive revenue growth. The financial health and growth prospects of the company demonstrate its potential to perform well, which means it is the right time to invest in the company.
New Diabetes & Heart Disease Drugs Propel Sanofi
Sanofi S.A. [EPA: SAN] is a French multinational pharmaceutical company, which develops healthcare solutions to prevent and manage a broad spectrum of medical conditions. The company engages in the research, development, manufacturing, and marketing of pharmaceutical drugs.
The Paris, France-based company has a presence in several therapeutic areas including diabetes, internal medicine, oncology, thrombosis, cardiovascular, central nervous system, and human vaccines.
It is the world’s largest producer of human vaccines. Sanofi is poised for solid growth as the company continues its research on new diabetes and heart disease drugs.
Sanofi’s [EPA: SAN] performance has also been pretty impressive, with the stocks gaining about 17% in the past year. Its new diabetes drug Toujeo, used for treating children and adolescents aged six and older with type 1 diabetes is showing a lot of promise, compensating to an extent for falling sales of its main diabetes drug, Lantus. Drugs for multiple sclerosis Aubagio and Lemtrada have also been doing well.
Sanofi’s key eczema and asthma medicine Dupixent has been performing exceptionally well and the trend is likely to continue. The blockbuster drug, used for the treatment of atopic dermatitis, has been the company’s critical growth driver, generating revenues to the tune of $628 million for Q3 2019.
The pharma giant currently has 85 different drugs in the pipeline, with 51 in the early phase of clinical trials, and another 34 in phase 3 or seeking approval.
Investors will be interested to see how CEO Paul Hudson revamps the drug maker’s strategy as the company searches for new diabetes and heart disease drugs, and expands in areas such as cancer.
Moreover, Sanofi’s emerging markets segment has been turning up a highly impressive performance boasting of a double-digit growth rate in Latin and Central America, and China. Analysts anticipate Sanofi’s stock price to reach €98.35 in the next twelve months, an upswing of around 7%.
Vodafone Focused On Strategic Initiatives To Grow
Vodafone Group Plc [LON: VOD] is a multinational telecommunications company. A global mobile operator, Vodafone provides a range of services, including mobile services, such as call, text, and data; mobile financial services, broadband, and data across mobile and fixed networks in Asia, Europe, Africa, the Middle East, and Oceania.
The company offers mobile operations in 25 countries, with partner networks in 47 more, and provides fixed broadband in 19 markets. The London, England-based Telecommunications Company is a constituent of the FTSE 100 Index, and has a secondary listing on NASDAQ.
In 2019, Vodafone generated a revenue of 43.67 billion Euros. In that year, Vodafone earned 10.9 billion euros in Germany, making it the most profitable country for the company, followed by the UK, though several challenges remain in the European market.
There’s been a recovery in Spain and acceleration in the UK, though Italy has proved to be a laggard. The telecommunication giant put up an impressive performance in the rest of world too, growing 9.1%, with a further improvement in South Africa led by the push to secure additional spectrum. The company expects to better its revenue in Q4, led by Europe.
Moving away from the numbers, Vodafone has also been making good progress towards its strategic priorities. It sealed a deal with Amazon Web Services for mobile edge computing across its European market.
It has also appointed a senior management team for its soon-to-be-listed towers business — European TowerCo. Shares of this spin-off could hit the market in early 2021.
Vodafone’s dividend yield is 5.03%, which is much higher than the industry (0.32%) and sector (0.30%). This, along with the fact that the global mobile operator is finally showing strong signs of dealing with its grave debt burden by selling assets into account, makes it the right time to invest in Vodafone.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.