Best French Stocks To Buy

 Best French Stocks To Buy: France is known for croissants, haute-couture, the Eiffel Tower, and the Alps. But can you think of any top stocks to invest in France?

In spite of its reputation for taxing its citizens heavily and employees taking long summer holidays, France has produced some of the most successful global companies over the past century.

Here we take a look at some of the best known stocks in France that are worthy of your consideration.

Demand for High-end Luxury Goods Fuels LVMH

LVMH Moët Hennessy – Louis Vuitton SE [OTC: LVMUY], also known as LVMH, is a French multinational luxury products company.

The Paris-based company, formed after the merger of fashion house Louis Vuitton with the champagne producer Moët & Chandon, and cognac manufacturer Hennessy, deals in perfumes, cosmetics, leather goods, luxury watches, jewelry, wines, etc.

LVMH is the world’s largest luxury company with an expansive portfolio of renowned brands, including Louis Vuitton, Christian Dior, Loewe, Dom Perignon, and Tag Heuer.

LVMH’s [OTC: LVMUY] stock has had a whale of a time rising more than 100% in the last three years.

The stocks gained altitude fueled by rising demand for its luxury goods in both developed and emerging markets. LVMH’s revenue rose 10% to 46.8 billion euros ($53.1 billion) in 2018.

The luxury goods maker performed exceptionally well in China, defying expectations of a slowing economy hampering consumption of luxury goods.

Tiffany & Co. (NYSE: TIF), which LVMH acquired in 2019 for approximately US$16.2 billion, also recently reported “double-digit” sales growth in China.

Another good thing going for the company is that it is based in Paris. As such, it finds itself insulated from the ongoing trade war between the United States and China, and away from tariffs and tit-for-tat boycotts of American products by the Chinese government.

Also, LVMH’s gross margin rose, and operating profit continues to soar as it seldom marks down its items. Additionally, the company’s high-end brands enjoy a dominant presence in the market it serves owing to limited competition.

Flush with cash, LVMH continues to reward its shareholders handsomely. It hiked its annual dividend 20% to €6 ($6.80) per share for 2018.

And despite the conventional wisdom that luxury goods are the biggest casualty in a tapering economy, it is often mid-range “affordable luxury” brands and not the highest-end brands like LVMH that receive a sound thrashing during periods of economic downturns.

New Markets & Promising Drugs To Help Sanofi

Sanofi S.A. [EPA: SAN] is a French multinational pharmaceutical company, which produces healthcare solutions to prevent and manage a broad spectrum of medical conditions.

Sanofi engages in the research, development, manufacturing and marketing of pharmaceutical drugs. The company deals primarily with therapeutic areas such as cardiovascular, human vaccines, central nervous system, diabetes, and oncology.

The Paris-based company, in fact, is the world’s largest producer of human vaccines.

Sanofi S.A. [EPA: SAN] is a good investment option for investors looking for a large-cap pharmaceutical investment.

The company, with a fairly diverse drug portfolio, has been recently in the news for its promising diabetes drugs. With more than 450 million people worldwide suffering from diabetes, pharmaceutical companies engaged in manufacturing and supplying drugs for diabetes get a lot of attention from investors.

Sanofi is one of the leading players in the market, with its main diabetes drug Lantus bringing in close to $4 billion for the pharma giant in 2018.

Increasing competition from other diabetes drug makers such as Novo Nordisk caused the revenue to slide in 2019 by close to $2 billion.

Sanofi, in order to make up for the loss incurred by the flailing Lantus sale, introduced diabetes drug Toujeo for treating patients aged six and older, who have type 1 diabetes. Toujeo generated close to $1 billion for the company in 2018.

Despite the vast potential of the diabetes market, it is worth mentioning that diabetes represents a minor portion of Sanofi’s drug portfolio. Out of 85 drugs in the pipeline, only two are used in cases of diabetes. Sanofi’s top-performing brand recently has been eczema drug Dupixent, clocking sales growth of over 140%.

On the flip side, the revenue growth for Sanofi has been flat. Vaccine sales slid close to 7%, and the diabetes segment is shrinking as well. A good thing for Sanofi is that it has been performing well in Latin and Central America as well as China.

With good international growth and a number of promising drugs in the pipeline, Sanofi holds a bright investment potential.

Danone is a good option for risk-averse investors

Danone S.A. [EPA: BN] is a leading global food & beverage company. The French multinational food-products corporation is based in Paris and was founded in Barcelona, Spain.

The company operates through four segments: Essential Dairy and Plant-Based Products, Waters, Early Life Nutrition and Medical Nutrition.

It has a presence in more than 120 countries across the world with brands such as Activia, Danette, Evian, Volvic, Nutricia, Aqua, Silk, and Vega.

The company is listed on Euronext Paris and via an ADR (American Depositary Receipt) program. A few of the company’s products are branded Dannon in the United States.

Danone [EPA: BN] has a market cap of €49b ($53.65 billion) and operates in more than 120 countries. Such multinational firms are always attractive to risk-averse investors, who generally look for big corporations with diversified revenue streams and attractive capital returns.

BN’s debt levels have fallen from €20b ($21.9 billion) to €18b ($19.71 billion) over the last 12 months. Positive operating cash flow and prospects of high future growth make Danone appealing.

Also, shares of Danone appear undervalued, which makes it a good pick for value investors. The financial health, management of current assets, and growth prospects of the food company validate its potential to outperform the market.

Time to Invest in Undervalued stocks of Orange?

Orange SA [EPA: ORA], formerly France Télécom S.A., is a French multinational telecommunications services company, offering a range of mobile, internet, telecommunications, landline, data transmission, and other value-added services.

It serves consumers and businesses in Europe, Africa, and the Middle East. The Paris-based company offers mobile, landline, internet and IPTV services under the brand Orange Business Services.

Orange SA’s [EPA: ORA] earnings over the next few years are expected to shoot up, some say by as much as 100%, indicating a rosy picture for investors.

The good thing for investors is that ORA is currently undervalued, which means it is the right time to accumulate its shares. With expectations of stronger cash flows and feeding into a higher share value, this is the right time to invest in Orange.

Recently, Orange entered into a 5G deal with Nokia. The deal with one of Europe’s biggest operators includes network management, Single Radio Access Network tech, and advanced automation.

Also, the decision by the EU to allow its members to decide on their own what part China’s Huawei Technologies can play in its 5G telecoms networks augurs well for Orange.

If you’ve been keeping tabs on Orange, this is perhaps the best time to invest. The company’s future prospects look bright and the current low price of its stocks calls for a quick and prudent investment decision.

Air France-KLM Set To Grow Despite Hiccups 

Air France-KLM Group’s [EPA: AF] main areas of business are passenger transport, cargo transport and aeronautical maintenance.

Air France–KLM was formed after the merger between two flag-carrier airlines Air France and KLM in 2004. Both Air France and KLM are members of the SkyTeam airline alliance, which has 19 member airlines.

With over 2,300 daily flights, mainly from its hubs at Paris-Charles de Gaulle and Amsterdam-Schiphol, it is the leading Group in terms of international traffic on departure from Europe. The airline’s Flying Blue loyalty program is one of the biggest in Europe with over 15 million members.

The Air France-KLM SA [EPA: AF] share price has moved up 95% in the last three years, close to thrice more than the average market return of around 36%. However, the performance in the year gone by was not as impressive, with the company returning only 7.2%, which is below the market average.

Nevertheless, the revenue growth of 3.1% per year is viewed as evidence that Air France-KLM is growing. If the company continues to grow, today’s shareholders might be right to hold on.

Recently, the Dutch government snapped up a near-13% stake in Air France-KLM, drawing strong condemnation from the French government, which accused the Dutch government of acting like an “unfriendly” corporate raider.

The Dutch government said that the decision to increase its holding was to counter French influence. Analysts voiced concerns that the two governments’ tug of war could derail Chief Executive Officer Ben Smith’s efforts to streamline the carrier and risked harming the company and its investors. KLM is the more profitable of the two airlines.

Analysts expect Air France KLM’s shares to reach around €11.18 ($12.24) in the next year, which represents an upside of 26.4% from the stock’s current price. The stock is likely undervalued right now, and with a positive earnings outlook on the horizon, Air France–KLM looks like an impressive value stock at the moment.

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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.