What are the best European stocks to buy?<\/b><\/p>\n
The US and European markets have diverged dramatically this year. In Europe, value stocks\u2014companies which appear underpriced\u2014have outperformed. In the US, growth stocks\u2014companies that are expected to grow faster than the rest of the market\u2014have dominated (and tech companies especially).<\/p>\n
Similarly, the US stock market has become more concentrated, whereas concentration is fading in Europe. And small companies are outperforming on Europe\u2019s stock market, even as they underperform in the US.<\/p>\n
This divergence is explained by the factors driving the expansion of large, listed growth companies in Europe. Since the Global Financial Crisis of 2007-2008, the European stocks with the best profit growth have been either companies with US dollar earnings (benefitting from US economic growth, high drug prices, and a strengthening dollar) or China-exposed stocks benefitting from strong GDP growth in China.<\/p>\n
Now, these forces have shifted, and in some cases even reversed. \u201cThe dollar is falling, US growth is slowing, trade barriers have risen, and the Trump administration is pushing for lower US drug prices,\u201d Bell writes.<\/p>\n
Meanwhile, China\u2019s relationship with Europe has pivoted away from that of a high-growth market to sell into and towards that of a major competitor that is creating deflation for the region.<\/p>\n
\u201cWe don\u2019t see these as near-term themes that will fade, but medium- to longer-term changes that Europe must grapple with,\u201d Bell\u00a0writes in the team\u2019s report. Given these pressures, the team doesn\u2019t expect growth or quality stocks to overtake value stocks.<\/p>\n
Goldman Sachs Research suggests diversifying portfolios across various styles and factors, with a preference for cyclicals. Cyclical stocks generally perform well during periods of economic growth. Within cyclicals, the team favors banks, technology, and retailers. It expects autos, chemicals, and commodity producers to underperform.<\/p>\n
The team also expects a supportive environment for smaller companies this year given their above-consensus view on economic growth, a strong backdrop for mergers and acquisitions, and expectations for the euro to strengthen further against the dollar, which tends to hurt large international companies.<\/p>\n
\u201cThe caveat is that the pace of growth, while improving, is still lackluster and, outside Germany, fiscal constraints and sovereign risks still apply, as we have seen most recently in France,\u201d Bell writes.<\/p>\n
\u00a0<\/p>\n
This article is being provided for educational purposes only. The information contained in this article does not constitute a recommendation from any Goldman Sachs entity to the recipient, and Goldman Sachs is not providing any financial, economic, legal, investment, accounting, or tax advice through this article or to its recipient. Neither Goldman Sachs nor any of its affiliates makes any representation or warranty, express or implied, as to the accuracy or completeness of the statements or any information contained in this article and any liability therefore (including in respect of direct, indirect, or consequential loss or damage) is expressly disclaimed.<\/p>\n","protected":false},"excerpt":{"rendered":"What are the best European stocks to buy? The US and European markets have diverged dramatically this year.…\n","protected":false},"author":2,"featured_media":395189,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5174],"tags":[2000,299,5187,2441,136590],"class_list":{"0":"post-395188","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eu","8":"tag-eu","9":"tag-europe","10":"tag-european","11":"tag-markets","12":"tag-outlooks"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115141764977171892","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/395188","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=395188"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/395188\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/395189"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=395188"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=395188"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=395188"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}