Given the recent inflation-fear-fueled turmoil in U.S. markets, it’s a good time to turn your attention to other parts of the world. European stocks are a logical, and potentially quite profitable, place to turn.
Granted, investing in European stocks can require a bit more leg work as many of them do not garner analyst research coverage in the U.S. Without consensus earnings estimates, stock analysis can be difficult. But you can access useful earnings and revenue estimates on at least a couple dozen European companies. Here are three companies with great fundamentals that you can add to your stock watch list.
European Stock #1: Equinor ASA (EQNR)
Equinor ASA (EQNR – yield 2.2%), formerly Statoil ASA (STO), is an integrated energy company operating in more than 30 countries, and based in Norway, where the government is a majority owner. The company changed its name in 2018 as it seeks to broaden its focus to include new energy solutions – primarily wind – and attract young talent.
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Like all energy companies, Equinor took a big hit in 2020 thanks to Covid; revenues declined 28% for the year, and the company failed to turn a profit for the first time since 2016. Now it’s profitable again, and its renewable energy division is leading the charge, partly due to the company selling stakes in several wind farms off the coast of Britain and the U.S. Equinor reported divestments of $1.4 billion in the first quarter. Meanwhile, the company expects traditional oil production to grow 2% this year.
Add it all together, and EQNR shares are having a nice year, up 30%, and up 68% since a late-October bottom. EQNR has plenty of momentum, and yet still trades at roughly 50% below its pre-pandemic highs.
European Stock #2: NXP Semiconductors (NXPI)
NXP Semiconductors (NXPI – yield 1.2%) is a chipmaker with operations in more than 35 countries, based in the Netherlands, and serving the automotive, IoT and industrial markets. The company is a rarity in the semiconductor industry, doing its own design and fabrication of its chips.
After a down 2020, NXP is expected grow revenues by 22% this year and earnings per share by 58%. So far, so good: first-quarter revenue expanded 27% year over year, while adjusted operating profit margins improved to 31% of sales (up from 25% in the first quarter a year ago). With the company making chips for plenty of high-growth industries like self-driving cars, digital payments and IoT, chances are it’s just ramping up its growth again following a rough year.
Investors seem to know it. NXPI stock is up 23% in 2021 and 91% in the last year. Trading about 9% below its April high and back on the uptick after a big dip, you can buy NXPI right here.
European Stock #3: Royal Dutch Shell (RDS-B)
Royal Dutch Shell plc (RDS-B – yield 3.6%) is a more familiar name, the British-Dutch energy company that’s headquartered in the Netherlands. Like Equinor, it has rebounded strongly along with the rest of the global oil industry. And things are about to get better: sales are expected to grow 55% this year, while earnings are projected to more than triple.
As for RDS stock (get the B shares), it hasn’t popped as much as the other two European stocks on this list, but it is up 12% year to date and 25% in the last year. It currently trades at about the midpoint of its 35-to-38 two-month range; any break above 38 and you’ll know a new rally is underway. Add in the healthy dividend and the cheap valuation (it trades at just nine times forward earnings), and there’s a lot to like here, whether you’re a value, growth or income investor.
Those are our favorite European stocks at the moment. However, there are plenty of other stocks outside U.S. markets that we like right now. If you want to learn some of their names, take out a subscription to our Cabot Explorer advisory, where Chief Analyst Carl Delfeld scours the globe for the best investment opportunities that few Americans know about. Carl’s track record speaks for itself: the average return among the stocks in his Explorer portfolio is 143%!
If that sounds right up your alley, click here.
Do you own any European stocks right now? Any big winners? Tell us about them!
Investment analyst and Chief Analyst of Cabot Wealth Daily, Chris Preston brings you all the latest from the investing world. Sign up to get updates and breaking news delivered FREE to your inbox. Get unlimited access to our library of complimentary investing reports.Sign up now!
*This post has been updated from an original version, published in December 2018.