Hywel Franklin of the Mirabaud Discovery Europe ex-UK Fund selected three European stocks that should benefit from the continent's rebound
Allocating the marginal pound in your portfolio to the biggest American technology companies has been simple and extremely profitable for the past ten years. But it appears that the "easy money" has already been made in this trade, so investors should think about where growth will come from over the next ten years rather than the previous one.
Europe is starting to regain prominence among investors looking for opportunities outside of the US. European stocks are not a legacy trade, despite what many people think. The continent's small- and mid-cap segments, which include over 2,000 companies, are teeming with innovative businesses that frequently command a dominant share of their sectors while being essentially unknown to most investors, despite the fact that the continent's large-cap indices heavily rely on traditional sectors.
Three European stocks to think about.
In order to find European stocks that might not be on the radar screens of larger funds or accessible to the majority of analysts, our fund deviates from the usual path. We travel throughout Europe every week to meet with management teams in addition to using a proprietary screening process to help us develop a focused, high-conviction portfolio of European stocks. Because we invest in smaller businesses, we are able to interact closely with management and develop very strong relationships with them.
Although this segment of the market has faced difficulties recently, the pandemic, the return of inflation, and the ensuing increase in interest rates have compelled companies to adjust, making European small-caps far more resilient than most people realize. These companies might not stay small caps for very long because the market is only now starting to acknowledge their quality.
The Netherlands-based construction and infrastructure company Royal BAM Group (Amsterdam: BAMNB) is well-positioned to benefit as the continent confronts the urgent need to update and reinforce its frequently deteriorating infrastructure. The organization has a sizable backlog of orders coming through its pipeline and may benefit greatly from increased government spending on infrastructure in the upcoming years. Although the market has started to acknowledge the company's quality in recent years, we think it still has more to go as infrastructure spending picks up speed throughout Europe.
The Swedish company AcadeMedia (Stockholm: ACAD) has expanded its early-years education business throughout the Nordic region and into Germany. It has a leading position in its industry and is mostly unaffected by macroeconomic shocks like the price of oil or US tariffs. The company makes a lot of money, and future demand for its services should be strong. An intriguing long-term opportunity, the stock is currently trading at an appealing price/earnings ratio of eleven.
Based in rural Bavaria, Einhell (Frankfurt: EIN) is a manufacturer and developer of power and do-it-yourself tools. The company was a pioneer in the development of battery-powered tools and is cost-competitive worldwide, even when compared to Chinese rivals. Einhell is beginning to reach more people throughout Europe and beyond.
Leave a comment on: Three European stocks to purchase right now