An investor recently asked me for some European stock recommendations. That can be a tricky endeavor, because many European stocks do not garner analyst research coverage in the U.S., asserts Crista Huff, growth and income expert and editor of Cabot Undervalued Stocks Advisor.
Fortunately, I do a tremendous amount of stock research annually in the fourth quarter. There are now 101 stocks with attractive fundamentals on my “waiting in the wings” list, and three of them are based in Europe.
While I’m not specifically adding them to our permanent portfolios, here they are for your perusal. (All dividend payouts are expressed in U.S. dollars.)
Equinor ASA (EQNR), formerly Statoil ASA (STO), is an integrated energy company operating in more than 30 countries, and based in Norway, where the government is a majority owner.
The company changed its name in 2018 as it seeks to broaden its focus to include new energy solutions — primarily wind and attract young talent. Equinor intends to focus 2019 activity in the Mariner and Rosebank oilfield projects in the U.K. Continental Shelf.
The price of Brent crude oil fell about 31% from an annual high of about 86 in early October to 59 in late November. The announcement of OPEC production cuts in early December then helped to reinforce price stabilization.
Earnings per share (EPS) are expected to grow 43.2% and 17.1% in 2018 and 2019. The 2019 price/earnings ratio (P/E) is low at 9.5, and the dividend yield is substantial at 4.2%, with a steady $0.23 quarterly payout.
The share price has fallen from 28.5 to 22 since September and could fall further this month. Dividend investors could begin buying soon in order to lock in the high yield, and growth investors should wait for the share price to turn upward.
NXP Semiconductors (NXPI), yielding 1.3%, is an electronics company with operations in 33 countries, based in the Netherlands, and serving the automotive, IoT and industrial markets.
In February 2018, Qualcomm (QCOM) made a bid for NXP that eventually failed to receive approval from China’s Ministry of Commerce. NXP received a merger termination fee of $2 billion from Qualcomm. NXP subsequently announced a $5 billion share repurchase authorization.
After a year of relatively slow EPS grow in 2018, the company is expected to grow EPS by 21.4% in 2019, while the P/E is just 9.0. There’s a steady $0.25 quarterly dividend payout, yielding 1.3%.
NXP’s stock fell from a 2018 high of about 125 to a low of about 70 in November. The share price has since stabilized within a range of 75 to 85. Try to buy below 80. When the stock begins climbing again, there’ll be upside price resistance at about 95.
Royal Dutch Shell plc (RDS.A) is a British-Dutch energy company that’s headquartered in the Netherlands. Earnings growth is strong, expected to reach 28.7% and 19.4% EPS growth in 2018 and 2019, respectively. The 2019 P/E is 9.4, and the steady quarterly dividend payout of $0.94 per ADS share is yielding 6.5%.
The 2018 share price has ranged from a high of 72 down to 58 and has not yet stabilized. Dividend investors could begin buying soon in order to lock in the high yield, and growth investors should wait for the share price to turn upward.
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