In this article, we discuss the 5 best European companies to invest in. If you want our detailed analysis of these stocks, go directly to the 10 Best European Companies To Invest In.
5. Volkswagen AG (OTC:VWAGY)
Number of Hedge Fund Holders: N/A
Stock performance YTD through November 27: -24%
Volkswagen AG (OTC:VWAGY) is a luxury German automaker, known for Beetle, which is its flagship vehicle. China is the largest market for Volkswagen AG (OTC:VWAGY), and the company specializes in hatchbacks, SUVs, pure ethanol vehicles, flexible-fuel vehicles, hybrid, and plug-in electric vehicles. With a market capitalization of $150.84 billion, Volkswagen AG (OTC:VWAGY) is one of the best European companies to invest in.
Publishing its Q3 earnings on October 28, Volkswagen AG (OTC:VWAGY) reported a GAAP EPS totaling $0.64, missing estimates by $0.22. The $66.52 billion revenue outperformed estimates by $2.34 billion.
Deutsche Bank analyst Tim Rokossa on December 9 lowered the price target on Volkswagen AG (OTC:VWAGY) to €210 from €270 but kept a Buy rating on the shares.
On December 8, FREYR Battery (NYSE:FREY) announced plans between Freyr’s partner, 24M Technologies and Volkswagen AG (OTC:VWAGY) to manufacture next-generation lithium-ion EV batteries using 24M’s SemiSolid platform. The partnership is working on the development of SemiSolid battery cells for use in Volkswagen AG (OTC:VWAGY)’s electric vehicles.
4. Novartis AG (NYSE:NVS)
Number of Hedge Fund Holders: 22
Stock performance YTD through November 27: +9%
Novartis AG (NYSE:NVS) is a multinational Swiss pharmaceutical company specializing in generic drugs, over-the-counter drugs, vaccines, diagnostics, contact lenses, and animal health products. Novartis AG (NYSE:NVS) is one of the largest pharmaceutical companies in the world.
Novartis AG (NYSE:NVS) announced its Q3 results on October 26, posting earnings per share of $1.71, exceeding estimates by $0.05. Revenue for the period increased 6.29% from the prior-year quarter, reaching $13.03 billion, surpassing estimates by $14.29 million.
Novartis AG (NYSE:NVS) reported on December 22 that it has entered into a definitive agreement to acquire all of the outstanding share capital of the UK-based ocular gene therapy company, namely Gyroscope Therapeutics. Novartis AG (NYSE:NVS) will make an upfront payment of $800 million and possible additional milestone payments of up to $700 million over time. Until the transaction is cleared by regulators, Novartis AG (NYSE:NVS) and Gyroscope Therapeutics will operate as independent businesses. The acquisition will increase Novartis AG (NYSE:NVS)’s expertise in ophthalmology, which will enable the company to treat and prevent blindness worldwide.
Berenberg analyst Luisa Hector lowered the price target on Novartis AG (NYSE:NVS) on December 15 to CHF 85 from CHF 88 and kept a Buy rating on the shares.
In the third quarter of 2021, 22 hedge funds were bullish on Novartis AG (NYSE:NVS), holding stakes totaling $1.43 billion. Renaissance Technologies is one of the largest Novartis AG (NYSE:NVS) stakeholders, with 3.30 million shares worth $270.4 million.
Here is what Oakmark Global Fund has to say about Novartis AG (NYSE:NVS) in their Q4 2020 investor letter:
“Novartis is one of Europe’s largest pharmaceutical companies and possesses a highly diversified portfolio of innovative products. Its share price underperformed both the broader market and its pharma peers during 2020, largely due to a few disappointing late-stage trials and the company’s lack of Covid-19-related therapeutics or vaccines. These short-term issues provided us with an attractive entry point to invest in a leading pharmaceutical franchise with compelling economics. We estimate that the market is currently ascribing almost no value to Novartis’ pipeline despite the company’s excellent track record in new drug development. We expect that Novartis will deliver mid-single-digit, top-line growth and expand margins over the next five years as a result of its cost-savings plan. The company possesses one of the most diversified product portfolios in the pharma industry with 15 $1b+ compounds, which reduces its reliance on any single compound.”
3. L’Oréal S.A. (OTC:LRLCY)
Number of Hedge Fund Holders: 2
Stock performance YTD through November 27: -17%
L’Oréal S.A. (OTC:LRLCY) is a French personal care and cosmetics company that sells and markets hair color, skin care, sun screen, make-up, perfume, and hair care products. L’Oréal S.A. (OTC:LRLCY) is one of the largest cosmetics companies in the world.
On August 3 it was announced that L’Oréal S.A. (OTC:LRLCY)’s sales rebounded by 33.5% in Q2 2021, after a tough prior-year quarter, and were 8.4% higher than 2019 levels. With a market capitalization of $269.1 billion, L’Oréal S.A. (OTC:LRLCY) is one of the best European companies to invest in.
Deutsche Bank analyst Tom Sykes on December 9 raised the price target on L’Oréal S.A. (OTC:LRLCY) to €450 from €430 and kept a Buy rating on the shares.
Fisher Asset Management, an approximately $161 billion Wall Street fund, is the largest L’Oréal S.A. (OTC:LRLCY) stakeholder, with 13.70 million shares worth $1.13 billion.
2. Roche Holding AG (OTC:RHHBY)
Number of Hedge Fund Holders: 3
Stock performance YTD through November 27: -17%
Roche Holding AG (OTC:RHHBY) is a Swiss multinational healthcare corporation that focuses on pharmaceuticals and diagnostics. In addition to being the largest global pharma company, Roche Holding AG (OTC:RHHBY) is also a notable provider of cancer treatments worldwide.
On December 6, Fitch Ratings affirmed Switzerland-based Roche Holding AG (OTC:RHHBY)’s long-term issuer default rating at ‘AA’ with a Stable Outlook.
Group sales increased by 8% at constant exchange rates to CHF 46.7 billion in the first nine months of 2021, and EPS is projected to grow broadly in line with sales. Roche Holding AG (OTC:RHHBY) also expects to increase its dividend in Swiss francs further.
Citi analyst Andrew Baum on December 22 resumed coverage of Roche Holding AG (OTC:RHHBY) with a Buy rating and a SEK 422 price target. The Omicron variant should ensure tailwinds for Roche Holding AG (OTC:RHHBY)’s first half of 2022 in diagnostics, according to the analyst.
In the third quarter of 2021, Fisher Asset Management, ARK Investment Management, and Ancora Advisors reported owning stakes in Roche Holding AG (OTC:RHHBY), collectively worth $164.77 million.
Here is what Ariel International & Ariel Global Fund has to say about Roche Holding AG (OTC:RHHBY) in its Q3 2021 investor letter:
“Global pharmaceutical and diagnostics leader, Roche Holding AG weighed on relative performance over the trailing one-year period. However, negative investor sentiment for pharmaceutical companies began to reverse this spring as COVID-19 vaccination rates climbed across developed markets. Weak prescription trends prior to June was an opportunity delayed, not denied, as people deferred routine doctor visits and physicals over the last year on fears of contracting COVID-19. In our view, a normalization in patient trends and prescription activity has driven returns across many of our pharmaceutical holdings in recent months. Our long-term thesis for Roche remains focused on its leadership in oncology treatments and strong prescription and insurance reimbursement profile. We believe the company is well positioned given its deep research and development capability and pipeline of new drugs coming to market over the next several years.”
1. Nestlé S.A. (OTC:NSRGY)
Number of Hedge Fund Holders: 4
Stock performance YTD through November 27: -12%
Nestlé S.A. (OTC:NSRGY) is one of the biggest European companies, with a market capitalization of $387.1 billion. Nestlé S.A. (OTC:NSRGY) is a Swiss multinational food and beverages conglomerate, with flagship brands including Nespresso, Nescafé, Kit Kat, Smarties, Nesquik, Vittel, and Maggi.
Barclays analyst Warren Ackerman inflated the price target on Nestlé S.A. (OTC:NSRGY) to CHF 135 from CHF 130 and kept an Overweight rating on the shares on December 9.
The company reported that total sales increased 2.2% year-over-year to CHF 63.3 billion for the nine months ending September 2021, and Nestlé S.A. (OTC:NSRGY)’s organic growth expanded by 7.6% over the period.
Tom Russo’s Gardner Russo & Gardner is the largest Nestlé S.A. (OTC:NSRGY) stakeholder as of Q3, with 9.5 million shares worth $1.14 billion. Overall, 4 hedge funds in the third quarter database of Insider Monkey were bullish on Nestlé S.A. (OTC:NSRGY).
Here is what Semper Vic Partners has to say about Nestlé S.A. (OTC:NSRGY) in its Q2 2021 investor letter:
“I believe that Nestlé shares are well-positioned in our portfolios based on its global growth potential. Nestlé’s global growth potential is a dividend from their trusted consumer brands’ 100-year command presence in over 100 countries. Over these years, Nestlé has developed trusted and cherished iconic brands. For instance, Nestlé has over 30 brands that have over $1 billion of annual turnover. Nestlé benefits from a vast Total Addressable Market (TAM) available through developing and emerging market consumers shifting from subsistence economies to the introduction of market-based economies. Nestlé benefits from its market leadership in two key categories that evidence extremely high brand loyalty – global pet food/care and global premium coffee (led by Nestlé’s globally leading Nespresso).
More importantly, Nestlé has a culture of long-term investing. Nestlé has long excelled at securing new markets and rolling out new products, often adjacent to long-standing brands. They also have a history of internal innovation (e.g., behind launch of new brand’s single-serve coffee platform, as a result of external acquisition of companies whose brands, technology, patent, manufacturing, route-to-market, adjacent category presence, etc., offer powerful long term returns on incremental investments deployed to meet demands of growing consumers and growing affordability for those consumers of Western-style goods and services).(Click here to see the full text)
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