The GRANOLAS 11 vs The Magnificent 7
Goldman Sachs coined the term GRANOLAS to represent the top 11 European stocks, akin to the "Magnificent 7" in the US.
Comparing the performances of GRANOLAS and the Magnificent 7, as shown in the chart below, reveals that their returns over the past three years were similar. However, GRANOLAS achieved this with less volatility. Visually, it's evident that GRANOLAS did not experience the significant drawdown in 2022 that the Magnificent 7 did.
While Europe may not be renowned for its tech companies, it boasts top-performing stocks and established brands. GRANOLAS, an acronym of the company names, aptly describes these European staples as steady investments. Half of them are pharmaceutical companies, with two in the beauty and luxury sectors. ASML and SAP are well-known tech companies, while Nestle is a staple food brand for many worldwide.
I will now provide an overview of each stock:
#1 GSK
GSK is listed in both the UK and the US under the ticker GSK. The company boasts a diverse drug portfolio, with many of its products protected by patents. Among its largest revenue drivers across various disease areas, vaccines for shingles rank highest, followed by specialty medicines for HIV, and general medicines for respiratory conditions.
Morningstar has assigned a wide moat rating to GSK, along with a fair value estimate of £2,200. This valuation indicates a 24% discount from its most recent trading price of £1,671.
#2 Roche
Roche, a Swiss pharmaceutical company, is listed on the Swiss Stock Exchange under the ticker ROG. Renowned for its oncology therapeutics and in vitro diagnostics, Roche's portfolio includes key drugs such as Herceptin, Tarceva, Kadcyla, Perjeta, and Zelboraf, all designed to target cancers with specific genetic markers.
Morningstar has awarded Roche a wide moat rating, along with a fair value estimate of 379 CHF. This suggests a significant 39% discount from its most recent trading price of 231.95 CHF.
#3 ASML
ASML, a standout in the semiconductor industry amid the chip war between the US and China, requires little introduction. This Dutch company has exclusive access to the world's most advanced lithography machines, capable of producing 3nm chips today. With no close competitors, it commands 90% of the market share.
Morningstar has assigned ASML a wide moat rating, along with a fair value of US$750. Given its last traded price of $942, the stock appears to be overvalued.
#4 Nestle
Milo, Kit Kat, Nespresso, and Nescafe are well-known and beloved consumer brands, all owned by Nestle. The company is listed on the Swiss Stock Exchange under the ticker NESN.
