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
Resources
Future stocks: our best ideas in Europe
Europe’s hidden tech titans
Benjamin Labatut: The Maniac
Gary Klein: Seeing What Others Don’t
Paul Kalanithi: When Breath Becomes Air
Richard Thomson: Apocalypse Roulette
Companies mentioned include
Adyen
ASM International
ASML
Camurus
Lonza
LVMH
Novo Nordisk
Richemont
Schibsted Marketplaces
Spotify
Timecodes
00:00 Introduction
01:45 From games of chance to European equities
03:30 The valuation opportunity
04:35 Addressing uncertainty and political instability
06:35 President Trump’s trade tariffs
08:30 Regulation and innovation
10:45 Our long-term growth investment philosophy
13:00 The case for Novo Nordisk
14:35 Tackling Wegovy’s muscle mass loss
15:25 Lonza’s growing market for biologics
16:50 Camurus’s FluidCrystal technology
18:05 Dominant digital platforms with network effects
19:40 Spotify chief executive Daniel Ek’s focus on customers
21:55 The importance of Adyen’s culture and leadership
24:40 ASML and ASM International’s semiconductor tools
27:25 Luxury conglomerates LVMH and Richemont
30:00 The advantage of ‘family involved’ companies
31:10 Being patient and putting up with volatility
31:55 Book picks
32:55 Spotting inconsistencies
