Business

This group of stocks has actually kept pace with the Magnificent Seven

For all the attention paid to the high-flying tech giants called the Magnificent Seven, there is another group that can compete with them, and at far less risk.

It’s called GRANOLAS, a term coined by Goldman Sachs in 2020 to refer to the largest European companies at the time: GSK GSK, +0.22% Roche ROG, +0.76% ASML ASML, +2.89% , Nestle NESN, +1.10% , Novartis NOVN, -1.17% , Novo Nordisk NVO, +2.37% , L’Oreal OR, +3.47% , LVMH MC, +0.67% , AstraZeneca AZN, -1.98%, SAP SAP, +0.22% and Sanofi SNY, -0.13%.

This chart shows, in terms of total returns since January 2021, that the GRANOLAS Group has the Magnificent Seven of Amazon.com AMZN, +2.71% , Apple AAPL, +0.41% , Alphabet GOOGL, +2.12% , Meta Platforms was able to keep up with META, -0.40%, Microsoft MSFT, +1.56%, Nvidia NVDA, +3.58% and Tesla TSLA, +2.12%, with a return of 63%, and volatility since 2018, the average has been two times low.

They are much cheaper than the Mag 7, trading at 20x earnings versus 30x, although the GRANOLAS are more expensive for the broader European market.

This grouping had a strong fourth-quarter earnings season, led by Novo Nordisk’s success with weight-loss drugs and ASML’s rise in machines that make microchip devices, although L’Oreal disappointed in part due to its difficulties in China.

“In our view, the reason this group of stocks trades at a premium to the market is because they offer strong (and predictable) growth,” say strategists led by Guillaume Jaisson.

They say the time to own GRANOLAS will be when global GDP growth is below 3%, which the bank expects to happen in the next five years.

In a world full of exchange-traded funds, it’s perhaps surprising that Goldman hasn’t created a fund to trade under its name, meaning investors who want to get into the theme would have to buy each stock individually.

Source: www.marketwatch.com

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Robert Wilson

Business & economics analyst. Breaking down intricate financial trends for informed decision-making.

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