In this article, we will look at the 10 Most Profitable European Stocks To Invest In.

How Could Trump’s Trade Tariffs Impact Europe?

After the U.S. Presidential elections, the global economies might face trade tariff tribulation as the Trump administration is expected to accelerate the trade war. China and Europe are especially expecting Trump’s potential trade policies that can heat the trade war. In addition, the rising perturbation around Germany’s upcoming snap election is a sign of worry for investors. Since the US elections, European stocks have retreated, outflows have increased, and the euro has slid against the U.S. dollar.

According to the European Central Bank’s chief economist, Philip Lane, if global trade feels more burden, the global economic output would suffer a sizable loss. “Trade fragmentation entails sizeable output losses,” said Lane, during a speech in Amsterdam. Lane anticipates a potential hit on the global output at between 2%, in case of partial trade restrictions, and almost 10% if a full ban is imposed.

Furthermore, the leading banks including JPMorgan, Goldman Sachs, and Citi have pointed out the euro as one of the most vulnerable currencies to Trump’s tariff agenda. Considering the region’s manufacturing exports and dependence on China, Europe could be exposed to trade tariff consequences.

READ ALSO: Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch and Jim Cramer on AMD and Other Stocks.

The United Kingdom’s inflation rate fell noticeably to 1.7% in September, just below the ECB’s 2% target for the first time since April 2021. On November 7, the Bank of England announced the rate cut by 25 basis points, bringing its key rate to 4.75%. The U.K.’s central bank has cut rates by a combined 75 basis points to 3.25% in 2024 so far. Investors expect the central bank to further cut rates during the next meeting in December.

Europe’s stock market has some interesting stocks that investors would want to keep in their portfolios to avoid too much concentration on U.S. assets. The pan-European STOXX Europe 600 has plunged nearly 2% since the U.S. elections, however, the index is up 11% over the last year, as of November 23.

With that, let’s take a look at the 10 most profitable European stocks to invest in.

Our Methodology

To compile our list of the 10 most profitable European stocks to invest in, we scanned European stocks through Finviz Screener using two indicators. We shortlisted the stocks with a minimum net income of $1 billion or more in the trailing twelve months (TTM) and with a 5-year net income compound annual growth rate (CAGR) of over 15%. From that list, we narrowed our choices to the 10 stocks that analysts see the most upside to. The list is ranked in ascending order of analysts’ average upside potential, as of November 22.

Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

10 Most Profitable European Stocks To Invest In

10. Tenaris S.A. (NYSE:TS)

Upside Potential: 9.46%

5-Year Net Income CAGR: 26.54%

TTM Net Income: $2.65 Billion  

Tenaris S.A. (NYSE:TS) is one of the leading European steel-producing firms with a global presence, headquartered in Luxembourg. The company has facilities in Mexico, Argentina, Colombia, the United States, and Guatemala.

Tenaris S.A. (NYSE:TS) is well-positioned for growth, making it an attractive choice for investors to add to their European stocks portfolio. Considering the company’s growth over the long-term, Tenaris has been impressive with 10-year and 5-year net income CAGR of 7.21% and 26.54%, respectively.

During the third quarter, the company posted revenue of $2.92 billion, a decline of 10% year-over-year. The EPS was reported at $0.81, down from $0.91 in the same quarter last year. However, Tenaris S.A.’s (NYSE:TS) Q3 results surpassed consensus estimates, beating EPS by $0.12 per share and revenue by $124.06 million. The drop in revenue from last year was mainly due to lower prices in the Americas and lower demand in the U.S., Mexico, and Saudi Arabia. In addition, the pipe shipments to Argentina also dropped.

The strong point for Tenaris S.A. (NYSE:TS) is that it continues to expand and strengthen its relationship with international oil companies and maintain its stronghold in complex offshore projects. ExxonMobil, Armaco, and Petronas are three of Tenaris’ biggest clients.

9. AerCap Holdings N.V. (NYSE:AER)

Upside Potential: 16.66%

5-Year Net Income CAGR: 18.84%

TTM Net Income: $2.53 Billion 

AerCap Holdings N.V. (NYSE:AER) is an Ireland-based company with the main business of aviation leasing. The company offers various assets for lease including narrowbody and widebody aircraft, regional jets, freighters, engines, and helicopters. AerCap also provides aftermarket equipment and services via its materials business, in addition to the lease, purchase, and financing of spare engines. AerCap has nearly 1,717 aircraft, over 1,000 engines, and 300 helicopters.

Being a leader in the aviation leasing market, AerCap Holdings N.V. (NYSE:AER) has had solid growth over the long run. The company doesn’t shy away from large investments. During Q3, the company continued its investments in new technology equipment with the delivery of 27 aircraft. In addition to that, AerCap took delivery of 13 new technology engines.

The business for AerCap Holdings N.V. (NYSE:AER) remains solid as it continues to generate strong operating cash flows. In Q3, the operating cash flows reached a record $5.6 billion for the last 12 months. Furthermore, the company bought around $500 million in shares, taking the total share repurchase to $1.2 billion for the first nine months of 2024. The company has also announced another share repurchase program of $500 million, showing the faith AerCap’s management has in its value.