Meet the GRANOLAS Stocks

The GRANOLAS are a group of 11 European stocks which, between them, have accounted for roughly 50% of the gains posted by the STOXX 600 index over the last year. Keep reading to learn more about the GRANOLAS stocks, which are drawing comparisons with their transatlantic rivals, the “Magnificent Seven”.

Introducing: The GRANOLAS Stocks

The acronym GRANOLAS was originally coined in 2020 by Goldman Sachs to describe the 11 largest companies in Europe by market capitalisation.

The Magnificent Seven group of technology stocks across the Atlantic have made lots of noise in recent years and obliterated the wider market. However, at the same time, the GRANOLAS stocks have quietly and diligently helped power Europe’s stock markets, keeping pace with the Magnificent Seven over the last three years.

But who are the GRANOLAS?

GRANOLAS Helping Push Europe to New Highs

As investors seemingly snap up GRANOLAS by the bowlful, this group of 11 stocks have accounted for roughly half the gains of the STOXX Europe 600 Index over the last year, which recently hit an all-time high. Together, these 11 companies account for around a quarter of the total STOXX 600 index.

The momentum of this group of stocks, together with their high weighting in the pan-European stock index, have inevitably led to comparisons with the so-called Magnificent Seven group in the US. The Magnificent Seven, for those who are unaware, comprises of Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia and Tesla.

However, whilst they may draw comparisons for the aforementioned reasons, there are a number of big differences. For starters, whereas the Magnificent Seven are exclusively technology stocks, the GRANOLAS represent a far more diverse group of companies.

The GRANOLAS are also less volatile than their US counterparts and trade at lower valuations in terms of earnings. Furthermore, only three of the Magnificent Seven - Apple, Meta and Microsoft - currently pay a dividend, with the highest yield belonging to Microsoft at 0.8%. Conversely, every one of the GRANOLAS pays dividends, with an average yield well above that of Microsoft. In order to demonstrate these differences, let's take a look at the GRANOLAS individually in more detail.

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Meet the GRANOLAS

We already know who the GRANOLAS are, but let’s take a closer look at each of the stocks which make up this list of European elites.

GSK

GSK, formerly GlaxoSmithKline, is a UK pharmaceutical and biotechnology company which, at the time of writing, is the seventh largest company listed on the London Stock Exchange (LSE) in terms of market capitalisation.

At the time of writing, GSK trades at around 12 times its trailing 12 month earnings, which is relatively low for this industry (in the following sections we’ll see how much some of its competitors currently trade for).

Until 2022, GSK had a 20+ year streak of raising or maintaining its annual dividend payment. However, following that year’s spin-off of the group’s consumer healthcare business, Haleon, GSK’s dividend understandably dropped. At the time of writing, GSK has a dividend yield of 3.6%, which is slightly below the 3.8% of the wider FTSE 100.

Roche

Roche is a Swiss healthcare company which operates two divisions, Pharmaceuticals and Diagnostics, and wholly owns US biotechnology company Genentech.

At the time of writing, it is the second largest company listed on the Swiss Exchange, where it has two classes of shares listed: Roche Holding AG, which have voting rights, and Roche Holding AG Participation, which do not have voting rights.

Its voting shares currently have a price to earnings ratio of around 15. Roche has raised its annual dividend for more than 30 consecutive years, with its voting shares yielding 4.1% at the time of writing.

ASML

Originally standing for Advanced Semiconductor Materials Lithography, AMSL is a Dutch company which is the largest company on the Euronext Amsterdam and the largest technology company in Europe by market cap.

It holds a dominant position in the lithography market, and is actually the only company in the world which produces extreme ultraviolet lithography machines. Essentially, ASML develops and produces the machines and systems which are in turn used to produce computer chips. Consequently, it has a crucial role in the global supply chain of semiconductors.

At the time of writing, it trades at approximately 48 times earnings and has a modest dividend yield of 0.7%.

Nestlé

Nestlé is the largest company listed on the Swiss Exchange and probably needs little introduction.

It owns a vast food and drink business, with more than 2,000 brands in its extensive portfolio, including big names such as KitKat, Smarties, Nescafé, Haagen-Dazs and San Pellegrino to name a few.

Owning such iconic brands affords Nestlé certain defensive characteristics, as many consumers will continue to buy their products regardless of the prevailing economic climate.

At the time of writing, Nestlé trades at around 22 times earnings. It has an impressive track record of paying dividends, having increased or maintained its annual dividend every year since 1959. Currently, this GRANOLAS stock yields 3.2%.

Novartis

Novartis is a Swiss pharmaceutical company, which is the third largest company listed on the Swiss Exchange.

After spinning off its generics division, Sandoz, the company is now focused on the areas of cardiovascular, immunology, neuroscience and oncology. It already has a number of promising drugs on the market, including heart drug Entresto and immunology and dermatology drug Cosentyx, sales of which helped drive an 8% increase in revenue in 2023.

At the time of writing, Novartis trades at around 26 times earnings and has a dividend yield of 3.9%.

Novo Nordisk

Novo Nordisk is by far the largest company listed in Denmark and also the largest company in Europe at the time of writing. In fact, its market capitalisation exceeded the entire gross domestic product of Denmark’s economy in 2023.

It is the second largest pharmaceutical company in the world and specialises in treatments for diabetes. The popularity of its diabetes and obesity medications has caused both revenue and share price to soar recently, with the stock gaining 50% in 2023.

After this surge in share price, Novo Nordisk now trades at approximately 44 times trailing earnings. It currently has a dividend yield of 0.4%.

L’Oréal

L’Oréal is the third largest company listed on the Euronext Paris and the world’s largest cosmetics company.

As well as the products which bear its name, L’Oréal also owns a number of other popular brands including Garnier and Maybelline. This range of products are mainly aimed at higher income consumers and, because these consumers are less affected by turbulence in the economy, this has allowed L’Oréal to perform fairly resiliently throughout the cost of living crisis.

Although share price dropped 20% in 2022, it bounced back in 2023, gaining 35% by the end of the year. At the time of writing, L’Oréal trades at 36 times earnings and has a dividend yield of 1.6%.

LVMH Moët Hennessy

The largest company listed in France, LVMH Moët Hennessy, specialises in producing a variety of luxury goods. Its segments include Wines & Spirits, Fashion & Leather Goods, Perfumes & Cosmetics and Watches & Jewellery. Amongst its world renowned brands it counts Dom Perignon, Louis Vuitton and Tiffany & Co.

Like L’Oréal, LVMH’s products are targeted towards high income individuals, which provides its business with a certain level of insulation from economic turmoil. Although share price dropped 4% in 2022, it recovered in 2023, gaining 5%.

At the time of writing, LVMH trades at 26 times earnings and has a dividend yield of 1.6%.

AstraZeneca

AstraZeneca is currently the second largest company listed in the UK. The pharmaceutical and biotechnology company became a household name during the pandemic after helping develop a Covid-19 vaccine which was used around the world.

Although, understandably, sales for its Covid-19 treatments dropped considerably in 2023, revenue still ticked upwards by 3%. Excluding its Covid-19 products, revenue increased 13% year on year, highlighting the strength of its other products.

At the time of writing, AstraZeneca trades at 35 times earnings. The GRANOLAS stock has increased or maintained its annual dividend every year for more than 20 years and has a dividend yield of 2.1%.

SAP

SAP is a software company which provides enterprise software for managing business processes. It is currently the largest company listed in Germany.

SAP shares gained 50% in 2023, its best stock market performance in more than a decade, and has recently hit its all-time high. As well as posting a solid performance in 2023, driven by a 20% jump in cloud revenue, SAP announced that it would be restructuring to facilitate growth in artificial intelligence.

Currently, SAP trades at 35 times trailing earnings. The software company has raised its dividend in each of the last 14 years and currently has a yield of 1.2%.

Sanofi

Sanofi is a pharmaceutical company which is currently the seventh largest company listed in France.

It has had a bit of a turbulent time in the stock market recently, with share price slumping almost 20% in just one day in October 2023. This dramatic decline was sparked by disappointing third quarter results which saw both sales and earnings per share decrease.

At the same time, the company also announced plans to spin off its consumer health business and abandoned its target of achieving an operating margin of 32% in 2025 as a result of increased investment in its pipeline.

At the time of writing, it trades at around 15 times earnings. It has increased its dividend every year for more than two decades and currently has a dividend yield of 4.0%.

How to Invest in the GRANOLAS

Unfortunately, there are not any Exchange-Traded Funds (ETFs) which are designed to track just the GRANOLAS stocks.

It is possible to gain exposure to the GRANOLAS by investing in an ETF which tracks the STOXX 600 index, such as the iShares STOXX Europe 600 UCITS ETF. However, the GRANOLAS only account for around 20% of this ETF, which may not appeal to investors looking to strictly invest in these 11 companies.

Alternatively, investors can construct their own portfolio of GRANOLAS shares by investing in each company individually. With an investing account from Admirals, it is possible to invest in all the GRANOLAS stocks! Keep reading to find out how.

1. Open an Invest.MT5 account.
2. Log in to the Dashboard.
3. Open the web trading platform.
4. Search for GRANOLAS stocks and click the symbol to open a price chart.
5. Create a new order, enter the number of shares and hit ‘Buy’!

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