TOP EUROPEAN STOCKS TO INVEST IN TODAY

SAP AG (SAP, Germany)

SAP is one of the largest providers of enterprise software in the world. SAP offers solutions to manage sales, finance, supply chains, human resources and other departments for medium to large businesses. The company’s solutions can be used to manage almost any part of any type of business.

SAP has made several large acquisitions in recent years which have taken some time to integrate. However, a recent change of leadership and pressure from activist investors have led to a streamlining of the organization.

SAP’s cloud business is beginning to grow very rapidly which has caused investors to take notice. If this continues, the stock will probably outperform competitors like Salesforce and Oracle.

SAP has a market value of € 150 billion and annual revenues of almost € 25 billion. The stock trades on a relatively high PE, but that should unwind quickly if the growth analysts are expecting materializes.

Vivendi SA (VIV, France)

Vivendi is a media company based in France. It owns Universal Music Group, Canal+, Gameloft, and several internet businesses. This is certainly not a growth business, but it does own very profitable assets.

Universal Music Group is benefiting from the growth in streaming music platforms like Spotify and Vivendi earns royalties every time music owned by UMG is played. Vivendi recently sold part of its holding in UMG which highlighted the fact that Vivendi’s assets may be undervalued. Vivendi plans to sell as much as 50% of UMG which could bring in over €15 billion.

Vivendi is worth € 30.5 billion and earns around €13 billion in revenue. Besides the potential for value to be unlocked, the stock has a generous 2% dividend yield.

Total SA (TOT, France)

Total is a diversified energy company. The company engages in every part of the oil and gas industry from exploration to extraction and distribution. Total has also been investing heavily in renewable energy which sets it apart from the other energy giants like Exxon Mobile and Royal Dutch Shell.

The oil price has been very volatile over the last 18 months. However, the fact that Total operates throughout the value chain, and is diversifying into renewable energy makes it one of the more defensive energy stocks to own.

Total’s ROE and capital allocation also compares favourably with its peers. It has managed to keep its net profit margin above 5% which is impressive for the sector.

The company’s market cap of € 128 billion makes it the 4^th largest energy company in the world. The PE is 15 and the forward PE is 11 which means the stock should offer a good return in the next few years. On top of that, there is a very generous 5.4% dividend yield.

Infineon Technologies AG (IFX, Germany)

Infineon is a Semiconductor manufacturer based in Germany. It was spun out of Siemens in 1999. Infineon manufactures components used in the automotive, power, electrical appliance, and digital security industries. 

The semiconductor industry is cyclical, and for the most, the industry has been through a rough period in the last 18 months. This has resulted in Infineon’s valuation falling to the bottom of its long-term range. The stock price has already established a strong trend in the second half of 2019 and looks set to continue its recovery into 2020.

Infineon’s market cap is € 25 billion, and it generates around € 8 billion in annual sales. The return on equity over the last 5 years has been 15% and the profit margin averages around 13% which gives it cash flow for growth.

Novartis AG (NVZ, Switzerland)

Novartis is a Swiss pharmaceutical company that was formed when Ciba-Geigy and Sandoz merged in 1996. Novartis produces several well-known drugs including Clozaril, Ritalin, and Voltaren. It also produces several products for the pet care and agriculture industries.

In total, the company owns patents on over one hundred pharmaceuticals, with several more in development. In fact, ten Novartis products have sales of over $100 million a month. Positive results were recently announced for tests of a breast cancer drug the company is developing.

The company’s market cap of CHF 231 billion with annual sales over CHF 50 billion. Novartis is currently fairly valued but is a defensive company and a solid long-term investment.

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