Are European stocks coming back into favour? After years of underperformance, many of the continent’s companies appear undervalued when compared to their historical prices and US counterparts. Investment manager Stephen Paice suggests that a group of growth-focused stocks could be among the biggest winners if sentiment shifts, and he identifies a handful of places they are thriving.

Background

Stephen Paice is a partner in Baillie Gifford, our Head of European Equities, an investment manager on the Baillie Gifford Growth Trust and European Fund, and a member of our International All Cap Portfolio Construction Group.

In this episode of Short Briefings…, he explores why European stocks have been trading at levels that make them appear historically cheap, what might cause opinion to turn, and how that relates to his pursuit of long-term exceptional growth.

Topics discussed include why some companies are more resilient than others to trade tariffs and other price pressures, changing attitudes to regulation, and the importance of culture.

Stephen also spotlights four categories of growth companies he believes offer huge promise:

the biological revolution: firms pioneering new treatments thanks to technological advances and deeper scientific understanding, with a focus on Novo Nordisk, Lonza and Camurus
dominant digital platforms: businesses carving out leading positions in niche markets, with special mention of Spotify and Adyen
semiconductors: companies fulfilling critical roles in the computer chip supply chain, including ASML and ASM International
luxury goods: companies deriving powerful advantages by bringing historic and prestigious brands under the same roof, including LVMH and Richemont