A staff member noses whisky samples at the Diageo Claive Vidiz Collection, the world’s largest collection of Scottish whisky at The Scotch Whisky Experience September 3, 2015 in Edinburgh, Scotland. Diageo owns 20 of the world’s top 100 spirits. (Photo by Jeff J. Mitchell/Getty Images)
Investors have long understood the importance of diversification across industries; as the saying goes, don’t put all your eggs in one basket. Many experts also emphasize the value of global diversification. Here, several leading advisors and MoneyShow.com contributors highlight favorite stocks based in Europe.
Todd Shaver, BullMarket
According to the FDA,
I consider this a big drug development. AstraZeneca and Merck (MRK) collaborated to investigate the combination of the two compounds. All development costs are shared jointly.
FDA orphan drug designation is primarily a function of the disease, not the drug — drugs that target diseases with fewer than 200,000 US patients will be granted orphan designation, and in some cases drugs targeting more than 200,000 patients can be granted the designation when the FDA judges that costs could not otherwise be recovered.
The bigger driver right now is the oncology business. While the company has gone all-out in immuno-oncology, there is more work to be done. The potential of the broader cancer portfolio should see growth in 2018, in part by acquisition.
We are excited to see new data and potential acquisitions related to immune-oncology this year. Remember, we are in a new era of fighting cancer that is honestly more exciting to think about than just simply what it means for stocks. It’s a big deal for the world.
We feel AstraZeneca is a strong value here. Revenues are steadily running around $16 billion-$17 billion annually. EPS is closing in on $3. Many argue the stock could be worth 20x EPS or more.
And you get a 4% dividend yield while you wait. This feels like a profitable situation to us. And if we are wrong, it is hard to see the stock trading too much lower as the dividend yield should hold the stock up.
British pharmaceutical giant AstraZeneca’s manufacturing site in Macclesfield, northwest England. A big driver is its oncology business. (Photo by Andrew Yates/AFP/Getty Images)
Bob Ciura, Wyatt Research's Daily Profit
International stocks tend to get much less coverage in the financial media than U.S. stocks. But in the search for high-quality stocks, investors should not ignore international dividend stocks.
While the U.S. stock markets appear overheated, there is much more value to be found in the international markets, particularly Europe, where stocks remain cheap. Let’s take a look at three of the top European dividend stocks for 2018.
It has maintained its hefty dividend, even amid the oil and gas industry downturn that took place from 2014-2016. In response to plunging commodity prices, Shell cut $20 billion from capital spending.
Shell’s integrated structure also helped it survive the downturn. In addition to exploration and production businesses, which are highly reliant on the price of oil and gas, Shell has a large refining business. Refining activities are not highly exposed to the price of oil, which helped Shell remain profitable through the downturn.
And, now that oil prices are rising once again, Shell is a major beneficiary. By the end of next year, the company expects $10 billion of new cash flow each year from its project lineup.
Best of all, Shell has a 5.2% dividend yield, and the company generates more than enough cash flow to sustain the current payout. As Shell realizes growth from new projects, there could even be room to increase its dividend payout.
Diageo is a giant in the alcoholic beverages industry. The London-based company manufactures some of the most popular spirits and beer brands in the world, such as Johnnie Walker, Smirnoff, Captain Morgan, Baileys, Tanqueray, Guinness, Crown Royal, Ketel One and more. Diageo has 20 of the world’s top 100 spirits.
Diageo’s strong brands provide the company with the ability to raise prices each year. Combined with global scale, the company is a cash machine: Diageo’s free cash flow increased 27% last year.
The company also has a strong foothold in the emerging markets, which gives it an edge over its U.S.-based competitors. More than 40% of Diageo’s annual sales are derived from Asia, Latin America and Africa.
Diageo has a semi-annual dividend, which yields 2.2%. The firm makes up for a relatively low yield, with high dividend growth rates. The final semi-annual dividend payment last year was raised 10% from the same dividend the previous year.
High growth from the emerging markets can easily continue to provide for 10% dividend increases each year, enhancing its position as one of the attractive international dividend stocks.
Vodafone’s future growth potential is very attractive, because the company is about to take a huge step forward in India, a key emerging market.
Last year, Vodafone announced a huge merger between its Vodafone India subsidiary, and India-based
John Buckingham, The Prudent Speculator
DPSGY has a diversified revenue stream, with 31% coming from Germany, 30% from the rest of Europe and 39% from the rest of the world.
After a solid 2017, the stock has tumbled in the first month of the year, but we think that snail mail will have a place for the foreseeable future and DPSGY’s effort to diversify with the DHL Supply Chain business (the largest global contract logistics provider) will give it a leg up on its European competition.
Supply Chain margin growth should also pick up as the company sheds unprofitable customers as a part of its 2020 plan. We also believe that DPSGY (which yields 2.4%) can benefit from the Amazon-style online shopping that hasn’t taken over Europe yet, as well as its leading position in more profitable European express and parcel mail (most other carriers haven’t diversified yet in Europe).
While online shopping might not reach the level it has in the U.S., primarily because of different consumer behavior, a global marketplace of goods available at the click of a button is incredibly enticing.
Jim Powell, Global Changes & Opportunities Report
I believe that the best investment plan to follow at this point is to invest in high-quality stocks that have already fallen over a cliff. It’s not to say that fallen angels won’t decline if the market drops sharply because they will. However, they will usually drop less than the market and will bounce back more quickly.
Longer-term, blue chip fallen angels also have good track records for fixing the problems that drove their prices down. When the angels find their wings again, the profits they often deliver can be eye-popping.
Volkswagen is surprising investors in the other direction. I recommended this fallen angel in October 2016 right after its diesel emissions scandal was exposed. When “diesel gate” was reported, VW’s stock plunged 45.1%, from $51.25 to $28.13.
VW’s management subsequently decided that rather than fight the diesel problem, it would ease itself out of that old technology and move instead to producing electric vehicles (EVs). The company has since made considerable progress towards that goal. VW may become the world’s biggest EV maker by 2021.
Volkswagen is already the world’s largest car company by sales, and it made new records in 2017. In addition to VW, the company owns