Are you tired of all the hype surrounding AI stocks in the U.S.? Looking for a more diverse and potentially lucrative investment opportunity? Look no further than European stocks.
Nicholas Anderson, a portfolio manager and managing director at Thornburg Investment Management, has identified a group of European stocks with the potential for faster earnings growth than the tech-focused “Magnificent 7” stocks dominating the U.S. market. He calls them the “Fantastic Five”: Novo Nordisk, ASML Holding, LVMH, AstraZeneca, and SAP.
According to Anderson, the Fantastic Five portfolio outperformed the Magnificent Seven portfolio over nine quarters, returning 32% compared to 25%. Looking ahead, Thornburg expects the European group to continue outperforming, with lower valuation ratios and higher earnings growth projections.
Anderson believes that U.S. investors should consider increasing their international allocation, as Europe offers impressive growth champions with diverse sources of growth. The European group not only includes AI plays but also capitalizes on markets like anti-obesity drugs and luxury retail.
Key players in the Fantastic Five include Novo Nordisk, a Danish pharmaceutical giant with a focus on GLP-1 drugs, and ASML, a Dutch semiconductor equipment supplier essential for AI chip production. These companies are driving the group’s rapid earnings growth and are favorites among Anderson’s picks.
Novo Nordisk has a “first-mover advantage” in the GLP-1 market and has seen increased demand for its weight loss and diabetes drugs. ASML, the largest producer of semiconductor equipment, is expected to see a major uptick in AI bookings, particularly for its innovative EUV lithography equipment capable of producing chips as small as 2 nanometers.
In comparison, Anderson’s preferred picks in the Magnificent Seven include Amazon and Alphabet, which have credible AI strategies and have seen stock gains this year. However, the Fantastic Five offers a more diverse investment opportunity with potentially greater upside than the heavily tech-concentrated U.S. stocks.
Thornburg Investment Management offers the Thornburg International Growth Fund, a concentrated portfolio of high-quality companies based outside the U.S. that has gained 8.8% year-to-date. With $43 billion in assets under management, Thornburg provides investors with unique and lucrative investment opportunities in the international market.
If you’re looking to diversify your portfolio and potentially capitalize on faster earnings growth, consider investing in the “Fantastic Five” European stocks identified by Nicholas Anderson. Stay ahead of the curve and explore new investment opportunities with Thornburg Investment Management.