3 Stocks to Buy to Ride Europe’s Coming Market Surge

Stocks to buy

Are you looking for European stocks to buy?

Bloomberg recently reported details about Bank of America’s (NYSE:BAC) latest survey of European fund managers. According to the report, 61% of the managers surveyed see an upside for European equities over the next 12 months, up from just 45% in August.

Further, approximately 37% of those managers see gains of up to 5%, while 2% to 3% see them in double digits. With American stocks looking expensive, this might be the way to go.

On September 13, Fox Business reported analysts from JPMorgan (NYSE:JPM) said, “Equities are up 16% YTD mostly on multiple expansion while real rates and cost of capital are moving deeper into restrictive territory.”

“History suggests this relationship is becoming increasingly unsustainable, posing risk to the equity multiple, especially since earnings expectations already face a high hurdle for 2024.”

With U.S. stocks set for a possible correction, here are three European companies to invest in from the ProShares MSCI Europe Dividend Growers ETF (NYSEARCA:EUDV) that appear ready to move higher in the next 12 months. At least two of the three will be U.S.-listed.


Source: Chart by Josh Enomoto

RELX (NYSE:RELX) is one of the holdings of EUDV with a 2.82% weighting.

The UK company provides information-based analytics and decision tools for four operating segments: risk, scientific, technical & medical (STM), legal and exhibitions. The tools help customers in more than 180 countries make better decisions.

As EUDV is a dividend-focused ETF, the company has paid its annual dividend since 2013.

RELX has used artificial intelligence (AI) technologies in its analytics for over a decade. It plans to continue leveraging AI to grow its four operating segments.

In late July, the company reported healthy earnings results for the first half of 2023. Its revenues and adjusted operating profits grew by 8% and 16% year-over-year, respectively, suggesting the good times will continue.

“RELX delivered strong revenue and profit growth in the first half of 2023. The improving long-term growth trajectory continues to be driven by the ongoing shift in business mix towards higher growth analytics and decision tools that deliver enhanced value to our customers across market segments,” stated CEO Erik Engstrom.

With a healthy operating margin of 33% in the first half of the year, up 180 basis points from a year ago, RELX is only getting started.

National Grid (NGG)

Source: Shutterstock

National Grid (NYSE:NGG) is the eighth-largest holding of EUDV with a 2.72% weighting.

I last recommended the UK utility in April 2021. It was one of 10 low-volatility stocks to buy for the long haul. Before that, in January 2019, I included it in a list of 10 utility stocks to buy. At the time, it was trading around $52.

As I said in both articles, you will not get rich owning NGG stock. However, if income is your bag, its 5.3% dividend yield should make you happy.

Four of the 12 analysts covering its stock rated it a Buy with a $72.26 average target price, 13% above where it is currently trading. With the 5.3% dividend yield, we’re talking about nearly 20% in total return over the next 12 months. That’s pretty good for a low-volatility stock.

As the company pointed out in its 2023 Investment Proposition presentation, it has plenty of revenue diversification, with 40% from the U.S., 49% from the U.K., and 11% from its National Grid Ventures (NGV) fund and other non-core investments.

In 2023, its operating profit grew 10% to 4.58 billion British pounds, with its NGV business generating 521 million British pounds in operating profits, up 66% from a year earlier.

Sanofi (SNY)

Source: nitpicker / Shutterstock.com

Sanofi (NASDAQ:SNY) is the 14th-largest holding of EUDV with a 2.62% weighting.

The French pharmaceutical giant reported Q2 2023 results at the end of July. Excluding currency, its revenues increased by 3.3% to 9.97 billion euros, with a 6.6% increase in its business operating income of 2.73 billion euros. That’s good for a 27.4% operating margin.

Its Specialty Care segment, which generates 44% of its quarterly sales, saw revenues increase by 11.8% in the second quarter to 4.40 billion EUR. A big chunk of its sales were from Dupixent — 58% of its Q2 2023 sales, up 34% over last year — its asthma and nasal drug it is collaborating with Regeneron Pharmaceuticals (NASDAQ:REGN).

One area that could become a big deal for Dupixent is treating chronic obstructive pulmonary disease (COPD). Recent clinical trials conducted by the company in this area have proven effective in reducing symptoms of COPD. If Dupixent is approved for treating COPD, it would be the first new treatment in over a decade.

Of the 24 analysts covering Sanofi stock, 17 rate it Overweight or an outright Buy, with a $61.74 average target price, well above current trading levels.

On the date of publication, Will Ashworth did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

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