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.
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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.
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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.
8. NXP Semiconductors N.V. (NASDAQ:NXPI)
Upside Potential: 18%
5-Year Net Income CAGR: 46.27%
TTM Net Income: $2.71 Billion
NXP Semiconductors N.V. (NASDAQ:NXPI) is a Netherlands-based holding company that makes and sells various products related to semiconductors. The company offers a wide range of microcontrollers and processors optimized for AI and machine learning applications in automotive, personal security and identification, mobile communications, and IoT industries, among others.
Although the demand across the automotive and IoT market is low, the company’s long-term policy is adjusted according to the changing circumstances. The long-term strategy for NXP Semiconductors N.V. (NASDAQ:NXPI) is to succeed in the fastest-growing secular end markets of automotive and industrial IoT. During Q3, the company posted revenue in line with its projection at $3.25 billion.
NXP Semiconductors N.V. (NASDAQ:NXPI) has a diversified portfolio which allows the firm to be flexible. Moreover, NXP’s long-term planning to tackle the market shortcomings and its growth over the years is a testament to its business.
On November 22, Wells Fargo assigned an Overweight rating to NXPI and set a price target of $250. NXP Semiconductors has a competitive positioning and diverse manufacturing in the semiconductor market, placing it among the most competitive semiconductor firms in the market.
7. Stellantis N.V. (NYSE:STLA)
Upside Potential: 18.28%
5-Year Net Income CAGR: 33.14%
TTM Net Income: $18.59 Billion
Stellantis N.V. (NYSE:STLA) is a holding firm based out of the Netherlands and is a top automaker and mobility provider around the world. Stellantis is a well-established name in the global market and owns famous brands including Abarth, Alfa Romeo, Chrysler, Dodge, Fiat, Fiat Professional, Jeep, Lancia and Ram. The company is mainly involved in designing, engineering, manufacturing, distributing, and selling vehicles.
In Q3, Stellantis N.V. (NYSE:STLA) results were on the downside as the company’s consolidated shipments declined by nearly 20% or 279,000 units year-over-year. However, recently, the company introduced STLA Frame, which is part of the Stellantis’ Dare Forward 2030 plan and added it to the lineup of global battery electric vehicle (BEV) platforms intending to achieve diverse electrification needs. The company is investing over €50 billion in electrification to obtain 100% BEV passenger car sales in Europe and 50% in the U.S. by 2030.
The company has industrial operations in over 20 countries and dealers in more than 130 countries. Stellantis N.V. (NYSE:STLA) operates in both luxury and mainstream passenger vehicle markets which include pickup trucks to SUVs. The company’s strong global footprint makes it a solid automobile stock for the long term.
Ariel Global Fund stated the following regarding Stellantis N.V. (NYSE:STLA) in its Q3 2024 investor letter:
“Lastly, shares of multinational automotive manufacturing company, Stellantis N.V. (NYSE:STLA) declined following a significant earnings miss. The company attributed the performance to lower sales, production disruptions from a product overhaul and weak performance in North America. Muted demand for electric vehicles in Europe also weighed on performance. In response, STLA is implementing operational improvement initiatives to bring down U.S. inventory levels through production cuts, consumer incentives and gradual price adjustments. Despite these results, management maintained its previous buyback and dividend commitments. Although we expect discounting to increase as U.S. inventory ages, we maintain a constructive view on the company. We believe STLA’s strong global footprint and commitment to industry-leading profitability, operational excellence, and strategic foresight will continue to enhance long-term shareholder value.”
6. Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA)
Upside Potential: 26.92%
5-Year Net Income CAGR: 15.33%
TTM Net Income: $9.29 Billion
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is a Spanish bank that is engaged in retail banking, wholesale banking, asset management, and private banking. The company has operations in the United Kingdom, the United States, Turkey, South America, and the rest of Eurasia.
In the third quarter of 2024, Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) yet again delivered strong results after a record Q2. In Q3, the company posted a net attributable profit of $2.63 billion, up by 26% year-over-year. The company continues to improve its metrics and has reached a record 20.1% in return on tangible equity in Q3. Spain and Mexico, two of the company’s major markets, are key to BBVA’s growth. The long-term profitability shows BBVA’s growth across different markets, especially Spain and Mexico.
Banco Bilbao Vizcaya Argentaria, S.A. (NYSE:BBVA) is optimistic to grow its loan book profitably and scale its operations considering the rise in consumer loans. The company’s major segments include consumers, cards, and Small and medium-sized enterprises (SMEs). As of September 2024, the company provided new loans to over 520,000 SMEs and 70,000 large corporations had access to BBVA’s financing. In addition to that, almost 115,000 families acquired homes via bank financing. The company has also allotted €16 billion to finance inclusive growth projects including the construction of hospitals or social housing.
5. ASML Holding N.V. (NASDAQ:ASML)
Upside Potential: 29.32%
5-Year Net Income CAGR: 25.27%
TTM Net Income: $6.92 Billion
ASML Holding N.V. (NASDAQ:ASML) is a leading manufacturer of extreme ultraviolet (EUV) lithography machines and the largest supplier in the semiconductor industry. Some of the biggest customers of ASML include TSMC, Intel Corporation, and Samsung Electronics Co., Ltd.
ASML Holding N.V. (NASDAQ:ASML) is set to face some heat following the new administration that will take office in January. The Trump administration will likely restrict semiconductor technology sales to China. The CEO of ASML Christophe Fouquet has acknowledged the changing scenario. However, the company has told investors that in the long run, they are now on track and expect 2025 and 2026 to be growth years for the industry and the company.
Semiconductor companies use EUV machines during the manufacturing of semiconductor chips and this is not possible without ASML’s latest technology. As ASML Holding N.V. (NASDAQ:ASML) is the only company in the world with this technology and capability, the company still holds a strong position, despite potential U.S.-China trade threats.
4. Banco Santander, S.A. (NYSE:SAN)
Upside Potential: 29.49%
5-Year Net Income CAGR: 16.11%
TTM Net Income: $11.75 Billion
Banco Santander, S.A. (NYSE:SAN) is a leading Spanish multinational financial services company. The firm’s major operations include Retail & Commercial Banking, Digital Consumer Bank, Corporate & Investment Banking, Wealth Management & Insurance, and Payments.
Banco Santander, S.A. (NYSE:SAN) is one of the few European banks with a global market and has unique competitive advantages such as diversification and customer focus. During the third quarter of 2024, the company continued to expand its customer base with balanced growth by business and region. The company’s profit was around €3.3 billion, up by 12% from a year ago. Banco Santander has added almost 5 million new customers over the last 12 months and has a total of 171 million customers, as of Q3.
The banking firm is continuing to improve its penetration in global markets, especially in Europe. The company’s Corporate & Investment Banking (CIB) segment is growing as its revenue soared by 41% year-over-year in the U.S. Overall, Banco Santander, S.A. (NYSE:SAN) is expanding its business across all regions and attracting higher customer activity.
3. AstraZeneca PLC (NASDAQ:AZN)
Upside Potential: 36.94%
5-Year Net Income CAGR: 25.87%
TTM Net Income: $6.49 Billion
AstraZeneca PLC (NASDAQ:AZN) is a leading biopharmaceutical company that develops, manufactures, and sells prescription medicines for various medical conditions. Three of the company’s top therapeutic areas are oncology, cardiovascular, renal, and metabolism (CVRM), and respiratory and immunology.
AstraZeneca PLC’s (NASDAQ:AZN) competitive advantage lies around its innovation pipeline and rising demand for its current treatments. Tagrisso, Imfinzi, and Calquence are all key to increasing sales of the company and the oncology therapy division is a major growth engine. The company’s steady sales of Symbicort and the rapid growth in Farxiga volume have boosted the CVRM therapeutic division. Whereas, the company’s rare disease therapeutic division is expanding based on increasing sales of Ultomiris and Soliris.
In Q3, the company’s total revenue increased by 21% year-over-year to $13.57 billion and the core EPS soared 27% to $2.08. Over the past nine months, AstraZeneca’s revenue has increased 19%, which shows the company’s solid performance.
The company is heavily focused on growth in the U.S. and that is why it is investing almost $3.5 billion in manufacturing and R&D in New York. AstraZeneca PLC (NASDAQ:AZN) remains one of the most promising stocks in the healthcare sector.
2. Aptiv PLC (NYSE:APTV)
Upside Potential: 38.68%
5-Year Net Income CAGR: 19.21%
TTM Net Income: $2.42 Billion
Aptiv PLC (NYSE:APTV) is a technology and mobility architecture company that designs and manufactures vehicle components. The company also offers electrical and active safety technology solutions to the global automotive and commercial vehicle markets.
Aptiv PLC (NYSE:APTV) is playing a vital role in transforming transportation into a more sustainable industry by providing cleaner and smarter mobility solutions. The company has a global reach across 50 countries and has over 138 manufacturing facilities and 11 technical centres. The company is operating its centers in diverse markets including high-growth regions such as China and Eastern Europe.
The company has strategic partnerships with leading firms including Hyundai, Nvidia, and Uber. These collaborations improve the firm’s position as a leader in ADAS and autonomous driving technologies. In addition to that, the company is focused on its long-term policy on China’s flourishing autonomous vehicle market, which adds to its competitive advantage.
In the third quarter of 2023, the company’s adjusted operating income margin improved to 12.2%, up from 11% a year ago, despite a 5% drop in revenue from Q3 2023. Aptiv PLC (NYSE:APTV) is also expanding its operations in India, which is one of the growing markets for automobile. The company expanded its facility in Chennai with an investment of over $45 million to produce advanced cockpit controllers, radars, and electronic control units for local and international markets.
1. Novo Nordisk A/S (NYSE:NVO)
Upside Potential: 44.04%
5-Year Net Income CAGR: 19.59%
TTM Net Income: $94.72 Billion
Novo Nordisk A/S (NYSE:NVO) is a Danish healthcare company engaged in diabetes care. The company mainly specializes in diabetes care and other chronic diseases. Novo Nordisk’s main focus remains on insulin products for diabetes treatment. However, the company is also focused on growing its market share and enhancing its product offering, especially in the treatment of diabetes and obesity.
Novo Nordisk A/S (NYSE:NVO) is successfully managing the supply and demand following the introduction of its weight-loss drug, Wegovy, into foreign markets. The company continues to improve its share in the diabetes industry as it has already surpassed its target of obtaining one-third of the market by 2025. Currently, NVO holds a 33.9% market share in the global diabetes industry.
In the first nine months of 2024, the company has achieved 24% sales growth and 22% operating profit growth from a year ago. The company’s sales are mainly driven by the rise in demand for its GLP-1-based diabetic and obesity medicines. The GLP-1 treatments cover 3x more patients compared to three years ago and have over 43 million patients being treated from the medication.
Artisan Partners stated the following regarding Novo Nordisk A/S (NYSE:NVO) in its “Artisan Global Equity Fund” Q1 2024 investor letter:
“In addition, shares of Novo Nordisk A/S (NYSE:NVO) rose after it reported phase 1 clinical trial results for its new experimental obesity drug Amycretin, a single molecule that operates as a GLP-1 receptor agonist, reducing one’s appetite. The new oral treatment achieved a 13.1% average weight loss after 12 weeks, more than doubling the efficacy of Wegovy for the same period. This result also bested Lilly’s Orfoglipron, another experimental drug that achieved 5%–6% average weight loss earlier in its trials. While the Amycretin data are preliminary, investors were encouraged by the prospects of Novo Nordisk solidifying a best-in-class obesity designation, a desirable status given rising competition. In our view, Novo Nordisk has the best obesity/Type 2 diabetes pipeline in the industry, which should help protect this franchise from competition over the next 10 years.”
While we acknowledge the potential of Novo Nordisk A/S (NYSE:NVO) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NVO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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