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Citi identifies European stocks that are similar to the highly-priced Magnificent Seven, but trade at cheap valuations and have more upside potential. Wall Street banks say that while U.S. mega-growth stocks like Nvidia have made headlines for their impressive gains this year, gains in European stock markets have been more concentrated or narrower, with a small number of stocks leading the gains. He pointed out that Following the US stock index, the pan-European Stoxx 600 stock index closed at a record high last week. “We are introducing a group of leading European companies, the “Super 7,” which are lagging behind the Magnificent 7 in the U.S., Citi strategists led by Beata M. Manthey wrote in a Feb. 28 note to clients. “However, the basic characteristics are similar.” In a continuing “shrinkage” environment, it could be a beneficiary. ” Citi strategists said Europe’s top five equity contributors have been responsible for 45% of the stock market’s gains so far this year. This is significantly higher than the typical 25% seen historically, they said. In contrast, the 45% concentration level seen in US stocks since the beginning of the year is more or less consistent with historical norms. .MAG7 .STOXX 1Y Line The investment bank has selected large-cap European stocks with high profit margins, solid earnings per share growth, and competitive advantages or “economic moats.” These metrics have helped it outperform U.S. giant stocks. Caps from Apple, Microsoft, Amazon, Tesla, Nvidia, Meta Platforms, Google’s parent company Alphabet, and more. As a result, Citi’s chosen Super Seven are Novo Nordisk, ASML, LVMH, SAP, Schneider Electric, Richemont and Ferrari. All stock symbols are also traded in the US. Shares in Novo Nordisk, the weight loss drug developer and Europe’s most valuable company, have risen more than 65% in the past 12 months. Similarly, chip equipment maker ASML is up nearly 50% over the same period. Despite gains over the past year, Citi says that as a group, Super Seven has lagged behind the Magnificent Seven, with price appreciation down 70% since the beginning of 2023, leaving room for further upside. It is pointed out that Looking ahead, Citi said Super7 was well-positioned to continue outperforming even if current “narrow” market conditions persist, and warned against selling the stock based on narrow market leadership. The bank also said cyclical stocks and broader market indexes will pick up in the medium term if economic growth expands from its current narrow trajectory. — CNBC’s Charlotte Reid contributed reporting.
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