European companies dubbed GRANOLAS have kept pace with the highflying tech giants, according to Goldman Sachs.
The term refers to a group of companies including GSK, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L’Oréal, LVMH, AstraZeneca, SAP, and Sanofi. This collection of stocks has proven to be a lower-risk investment, keeping up with the likes of Amazon, Apple, Alphabet, Meta Platforms, Microsoft, Nvidia, and Tesla. Since January 2021, GRANOLAS has recorded a 63% return with half the volatility of these popular tech firms.
While they are cheaper, trading at a price-to-earnings ratio of 20 compared to the Magnificent Seven’s 30, GRANOLAS are more expensive than the broader European market. The fourth quarter reporting season has been strong for this group, particularly due to Novo Nordisk’s success with weight-loss drugs and ASML’s surge in microchip-equipment making machines. However, L’Oréal faced challenges in China and disappointed investors.
According to strategists led by Guillaume Jaisson, the reason for the premium valuation of GRANOLAS is their ability to offer strong and predictable growth. Goldman Sachs believes that owning GRANOLAS is particularly beneficial when global GDP growth is below 3%, which is expected over the next five years.
Interestingly, Goldman Sachs has not created an exchange-traded fund to trade on the GRANOLAS moniker. Therefore, investors wanting exposure to this theme would need to buy each stock individually.
Analyst comment
Positive news: European companies dubbed GRANOLAS have proven to be a lower-risk investment, keeping up with highflying tech giants. They have recorded a 63% return with half the volatility of popular tech firms since January 2021. The fourth quarter reporting season has been strong for GRANOLAS, with Novo Nordisk’s success and ASML’s surge in microchip-equipment making machines. Goldman Sachs believes owning GRANOLAS is beneficial for strong and predictable growth, especially when global GDP growth is expected to be below 3% over the next five years.
Market prediction: GRANOLAS stocks are likely to continue performing well, offering strong and predictable growth. Investors seeking exposure to this theme will need to buy each stock individually as there is no exchange-traded fund available.
