It may finally be time for European stocks to shine.
Pimco co-founder and Wall Street investing legend Bill Gross recently said the easy money has already been made for investors looking to play the global health crisis rebound. In his latest investment outlook note, Gross says central bank stimulus measures will likely scale down in coming quarters, and there is "little money to be made" in global equity markets. However, Gross mentioned tobacco, banks and European stocks as three market sectors that have been shunned during the recent rally and could provide additional upside for long-term investors. Here are seven European stocks to buy today, according to CFRA.
SAP (ticker: SAP)
SAP is a leading German enterprise application software stock. U.S. tech stocks have been on fire for more than a decade, and the tech sector has led the 2020 recovery from March lows. SAP has been a strong performer as well, gaining about 16% year to date. Analyst Jun Zhang Tan says SAP is transitioning its business from a licensing model to a cloud model, which should help the company reach 80% recurring revenue by 2023. Despite the health crisis, SAP should attain 87% earnings per share growth this year, Tan projects. CFRA has a "buy" rating and $176 price target for SAP stock.
ASML Holding (ASML)
ASML is a Dutch market leader in lithography tools used in the semiconductor manufacturing process. The company has also performed well in 2020, gaining about 22% year to date. However, Tan says more upside is ahead for the tech stock, given solid customer demand and growth drivers such as 5G support and high-powered computing. Tan says supply chain disruptions will negatively affect the company's 2020 revenue, but sales will simply be pushed into 2021. Looking ahead, ASML's next-generation extreme ultraviolet lithography product should help boost margins, Tan says. CFRA has a "buy" rating and $435 price target for ASML stock.
AstraZeneca is a U.K. pharmaceutical company that is testing one of the leading coronavirus vaccine candidates. The business recently had to halt its trials because of a serious side effect in one trial participant. However, it quickly resumed testing in Britain following an investigation. Analyst Wan Nurhayati says investors shouldn't expect the vaccine to be a major profit driver, given that the company is prioritizing affordable distribution. But she says the company's other new products will help grow revenue in the high single-digit percentage range in 2020. CFRA has a "buy" rating and $61 price target for AZN stock.
Sanofi is a global pharmaceutical company based in France. Nurhayati is bullish on monoclonal antibody drug Dupixent, which treats allergic diseases such as eczema and asthma. She says Dupixent will help offset some of the negative effects of Sanofi's declining diabetes unit. Sanofi is also targeting mid- to high-single-digit compound annual sales growth in its vaccine unit through 2025. Nurhayati says the company's 30% operating margin target in 2022 is likely within reach now that it is cutting its diabetes and cardiovascular research budgets. CFRA has a "buy" rating and $56 price target for SNY stock.
Total SE (TOT)
French oil major Total SE is one of the largest energy companies in the world. The oil industry has taken another heavy blow because of a sharp decline in global travel, but analyst Jia Man Neoh says Total is an attractive value opportunity. Neoh says Total has a long-term track record of delivering steady growth regardless of the external environment. The company also has a robust pipeline of project startups in the works and a healthy balance sheet that includes a gearing ratio of less than 28%. CFRA has a "strong buy" rating and $43 price target for TOT stock.
ABB is a Swiss technology company specializing in electrification products, robotics and industrial automation. Analyst Varun Venkatraman says ABB's decision to sell its Power Grids business to Hitachi for $6.85 billion in July has ABB well-positioned to improve its margins and deliver long-term revenue growth for investors. Venkatraman says cash proceeds from the deal will be used for share buybacks that will boost earnings per share. In addition, he says ABB is a leader in the long-term growth market of industrial automation. CFRA has a "buy" rating and $28 price target for ABB stock.
Vodafone Group (VOD)
Vodafone is a British multinational telecommunication company that has nearly half a billion customers in more than 30 countries. Analyst Adrian Ng says Vodafone's diverse business profile will help it generate long-term growth. In addition, he says the company has expanded its margins for five consecutive years thanks to its Fit for Growth cost savings initiative. Like its American telecom counterparts, Vodafone also pays a sizable 7.5% dividend. Ng is projecting 25% EPS growth in fiscal 2021 and 42% growth in fiscal 2022. CFRA has a "buy" rating and $16 price target for VOD stock.
European stocks to buy now:
-- SAP (SAP)
-- ASML Holding (ASML)
-- AstraZeneca (AZN)
-- Sanofi (SNY)
-- Total SE (TOT)
-- ABB (ABB)
-- Vodafone Group (VOD)