International stocks, at large, are perking up in 2024. Novo Nordisk, ASML Holding, AstraZeneca, SAP and LVMH are names worth getting to know in Europe, one analyst says.
Like the Mag 7 stocks, these European megacap stocks delivered market-beating performance recently, Thornburg portfolio manager Nicholas Anderson wrote in a May 2024 blog post. Megacap stocks are typically those with market capitalizations of more than $200 billion.
Yet, Anderson says, the European names remain underappreciated by many investors vs. the Magnificent Seven stocks.
Europe's Equivalent To Magnificent Seven Stocks
Anderson dubbed Novo Nordisk stock and its peers the "Fantastic Five" of Europe. That's because they "match or surpass" the Mag 7 in most metrics such as performance, resilience, growth and valuation.
"As such, investors should take the time to familiarize themselves with these impressive companies," he advised.
Even better, IBD thinks highly of a pair of those five international stocks, as well. ASML stock and Novo Nordisk belong to IBD Leaderboard. Novo Nordisk stock also earns a spot on the IBD 50 list of top growth stocks, as well as IBD SwingTrader.
IBD's proprietary ratings also reflect a solid view about AstraZeneca stock and SAP. But the exclusive ratings take a dimmer view of luxury play LVMH.
'Fantastic Five' May Offer Higher Returns, Lower Risk
From end of 2021 through March 2024, the Fantastic Five stock portfolio jumped 32% vs. a 25% gain for the Magnificent Seven, Anderson's study, relying on Bloomberg data, showed.
This period included aggressive central bank interest rate-hike cycles in both the U.S. and Europe. It also spanned sharp market drawdowns followed by strong recoveries in both regions.
But during the 2022 market correction, the Fantastic Five stocks suffered a maximum drawdown of 18%, Anderson said, citing Bloomberg data. That compared with a 40% plunge for the Mag 7 stocks.
"The European Fantastic Five have delivered better results to investors — with less risk," Anderson concluded, tying that to the diversification of these international stocks in part.
Stronger Growth Outlook For Novo Nordisk Stock, Peers
As a group, Novo Nordisk and its peers are not overly reliant on technology. They address the markets for advanced drugs and luxury goods, alongside artificial intelligence and enterprise software.
Anderson highlighted the stronger growth potential of the European companies. Over the next three years, the Fantastic Five are expected to grow earnings 18% annually vs. 14% for the Mag 7, he said.
Denmark-based Novo Nordisk offers GLP-1 diabetes and obesity drugs, a fast-growing market. It enjoys a first-mover advantage there. Over the last four quarters, the company's EPS growth ranged between 27% and 71%, according to FactSet. Sales growth ranged from 19% to 43%. In the past year, Novo Nordisk stock surged 82%. It made a new high in Friday's stock market action.
Diverse International Stocks Include AI Play ASML
Demand is booming for Dutch manufacturer ASML's cutting-edge lithography equipment, needed to define circuit patterns in production of AI chip. Earnings growth plunged 39% in the latest quarter, but ranged between 13% and 189% in the prior four quarters. ASML stock rocketed 45% in the last year.
Enterprise software developer SAP recently completed its cloud transition. Similar to ASML, Germany's SAP saw earnings growth sink in the latest quarter after rebounding double digits over the previous four quarters. SAP stock soared 46% in the past year.
The U.K.'s AstraZeneca offers established and new breast cancer drugs. Sales boomed 17% in its latest quarter, the highest since Q2 2022. Headquartered in France, LVMH is the parent company of Louis Vuitton and Moet Hennessy.
The pair have been relative laggards in this group of international stocks in the past year, with AstraZeneca stock up 9% and LVMH down 5%.
All can be found among the top 10 holdings in iShares Core MSCI Europe ETF.
