European Version of the Magnificent 7 Trades at 30% Discount, Says Goldman Sachs
According to Goldman Sachs, the European version of the Magnificent 7, also known as the GRANOLAS, is currently trading at a remarkable 30% discount.
This impressive group comprises major European companies like GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, SAP, and Sanofi. Collectively, these companies hold a significant portion of Europe’s market capitalization, equivalent to several major sectors combined.
Despite subdued domestic GDP, the GRANOLAS have been instrumental in driving gains in the European equity market over the past year. Analysts emphasize the group’s growth potential in the current business cycle, its low volatility, high and stable margins, as well as its strong balance sheets. Furthermore, the GRANOLAS are well-positioned to benefit from the current trend towards passive investment strategies and the liquidity challenges faced by the European equity market.
Interestingly, even though the GRANOLAS possess a high price-to-earnings (P/E) ratio of 20x, they are still trading at a significant discount compared to their US counterparts, known as the Magnificent 7, which have a P/E ratio of 30x. Analysts predict that the GRANOLAS will continue to experience robust growth, with a projected 7% revenue compound annual growth rate (CAGR) until 2025. In contrast, the market, excluding the GRANOLAS, is expected to achieve less than 2% growth during the same period.
This anticipated growth for the GRANOLAS is supported by several factors, including high entry barriers, solid balance sheets, as well as substantial investment in research and development (R&D) and growth capital expenditures.
Overall, despite their higher valuation, the GRANOLAS present an attractive investment opportunity in the European equity market, thanks to their potential for continued strong growth and their current discounted trading prices.
Analyst comment
Positive news: The European version of the Magnificent 7, known as the GRANOLAS, is trading at a 30% discount, according to Goldman Sachs. These major European companies have been driving gains in the European equity market with their growth potential, low volatility, and strong balance sheets. Analysts predict robust growth for the GRANOLAS, with a projected 7% revenue CAGR until 2025. Despite their higher valuation, the GRANOLAS present an attractive investment opportunity in the European equity market with their potential for continued strong growth and discounted trading prices.
As an analyst, I believe the market for GRANOLAS will experience strong growth and their current discounted trading prices present an attractive investment opportunity.
