These European stocks are valued at a 30% discount to the Magnificent 7 and have the potential to outperform the market.
These 5 European stocks could beat the Magnificent 7 if the AI bubble bursts.
In 2023, Nvidia shares gained 239%, constantly breaking market expectations. Meta shares increased by 194%, Tesla shares by 102%, Alphabet (GOOGL) by 58%, Microsoft by 57% and Apple by 48%. At the beginning of 2024, the rally is still solid, but a correction would be very physiological. It is no coincidence that in recent months many hedge funds have reduced their exposure to the sector.
According to JPMorgan, European stocks are still underweight (and at a discount of 30% on average) and could offer investors an attractive profit prospect. That is not to mention the GRANOLAS shares, considered a safe haven by European investors.
1) Hello Fresh (upside +66%)
Hello Fresh is an international company providing meal prep kits in North America, Western Europe, New Zealand, and Australia. The Berlin-based company has enjoyed a period of extraordinary growth during the pandemic, with shares more than quadrupling thanks to a surge in online food orders from homebound customers
After reaching absolute records of around €97 in 2021, the stock listed on Xetra has however lost over 87% of its value.
HelloFresh recently scaled back its adjusted EBITDA forecast for 2023 to a range of €430 million to €470 million, down from the €470 million to €540 million it confirmed previously. This surprised analysts, who are now questioning the company’s future visibility. HelloFresh shares have undergone a sharp correction, losing all their pandemic gains and falling by more than half their value over the past two months. Concerns about inflation, impacting consumers’ wallets, and rising ingredient costs helped accelerate the losses.
JPMorgan experts recently recommended "buy" on the stock with a target price of €20.
Morgan Stanley also improved its rating on the stock, from "Equal-weight" to "Overweight", but lowered its price target from €18 to €17. According to the bank’s analysts, the potential of ready meals in North America and Europe is underestimated by the market.
2) Total Energies (upside +21.5%)
Total Energies represents a potential opportunity for investors looking for discount stocks, despite the challenges highlighted by recent financial results (released February 7). Despite reporting a decrease in revenue in the fourth quarter of 2023 compared to the previous year, mainly due to changing oil prices, the company’s strong financial foundation is evident in its consolidated net profit of $5 billion in the period. Looking at the full year, although revenue fell 15% compared to 2022, Total Energies maintained a dividend proposal of 7.1% growth compared to the previous year, indicating financial stability and a commitment to investors.
With a focus on optimizing margins and efficiently managing industry challenges, Total Energies could emerge as an attractive opportunity for investors seeking long-term value in the energy sector.
3) Deutsche Telekom Dte (upside +38%)
Deutsche Telekom is another European stock under JPMorgan’s lens, considering the company’s solid performance and positive outlook in the European telecommunications sector. With the recent upward revision of its financial forecasts, Deutsche Telekom has demonstrated steady growth, driven primarily by the strong expansion of its home market in Germany, where it recorded a significant increase in the number of broadband users and contracted mobile customers in the third quarter.
Furthermore, the continued contribution of its business in the United States, mainly through T-Mobile US, has further consolidated its position in the market. Deutsche Telekom’s decision to allocate up to 2 billion euros to buy shares and increase its dividend reflects confidence in its financial strength and commitment to creating value for shareholders. Despite increasing competition, both in the United States and Germany, Deutsche Telekom continues to demonstrate sustained growth and solid operational performance, confirming its position as a major player in the telecommunications industry. With well-established leadership and a focused growth strategy, the company presents itself as a promising investment for those seeking long-term return opportunities in the telecommunications sector.
According to JPMorgan, the stock has a growth potential of 38% at 31 euros.
4) London Stock Exchange Group Lseg (upside +26.5%)
JPMorgan also includes London Stock Exchange Group (LSEG) in its top list for 2024. Through a research note aimed at examining the potential impact of decreasing interest rates on markets in the year ahead, the bank’s analysts confirm the "overweight" rating on LSEG, judging positively the reduced exposure to risks deriving from the reduction of interest rates. With a solid earnings growth trajectory and a positive connection to growth trends within the financial sector, the bank estimates an average annual EPS growth of 13% over the period 2023-2026.
The stock’s target price has been raised to 11,200p, from 10,400p previously, implying a potential upside of 26.50% from the current level of 8,850p.
5) Dessault Systèmes (upside +6.5%)
Investing in Dassault Systèmes shares could represent an interesting opportunity for investors, considering the company’s solid financial performance and growth prospects in the software sector. In the fourth quarter of 2023 and the full year, total revenue increased 8% and 9%, respectively, with notable 12% and 10% increases in recurring revenue, driven by strong 22% subscription growth. % and 16%. Despite a slight 4% decline in licensing and other revenues, the 3DEXPERIENCE business reported a notable increase of 21% in the fourth quarter and 19% for the full year, supported by large transformation deals. Additionally, the non-IFRS operating margin improved to 35.9% in the fourth quarter and 32.4% for the full year, reflecting an acceleration of 160 basis points in the quarter, in line with company targets.
Dassault Systèmes also achieved full-year non-IFRS diluted earnings per share of €1.20, up 12% in constant currencies, achieving its plan to double diluted earnings per share in 5 years. Furthermore, for 2024, the company has set ambitious non-IFRS targets, forecasting diluted earnings per share of between €1.29 and €1.31, with revenue growth of between 8% and 10%. . With stable leadership and a commitment to sustainable innovation, Dassault Systèmes appears well-positioned to continue generating value for investors over the long term.
|DISCLAIMER
The information and considerations in this article should not be used as the sole or primary basis for making investment decisions. The reader retains full freedom in his own investment choices and full responsibility in making them, since he alone knows his risk propensity and his time horizon. The information contained in the article is provided for informational purposes only and its disclosure does not constitute and should not be considered an offer or solicitation to the public for savings.|
Original article published on Money.it Italy 2024-02-27 07:46:00. Original title: 5 azioni europee per battere le Magnifiche 7 (secondo JPMorgan)
