Stocks in Europe moved north after voters in the European Union (EU) parliamentary elections showed that pro-EU, business-friendly centrists will probably make up the majority of the Parliament, while Eurosceptic groups did not walk away with as many votes as expected. With European equities hot now, investors should look at some European stocks right away.
Election Results: Who Won, Who Lost?
Populists or in other words Eurosceptic parties saw gains, but, secured lesser number of votes compared to what preelection polls had estimated. There were serious differences among such Eurosceptic parties regarding immigration issues and attitude toward Russia. Swedish Prime Minister and now co-chair of the European Council on Foreign Relations added that “there was an increase by the far-right, but fairly marginal and far less than what people had predicted.”
And now it’s clear that due to the smaller-than-expected gains, the far-right won’t be in a position to decide the future of Eurozone by itself. Notably, the far-right National Rally party of Marine Le Pen in France managed to marginally beat President Emmanuel Macron’s party coalition; even though she claimed that it is “a victory for the people” on Twitter. Right-wing populists also fell short of expectations in Denmark, Netherlands, Austria and Germany.
By the way, the center-left and center-right coalition lost its majority. The European People’s Party (EPP), the center-right group and Progressive Alliance of Socialists and Democrats (S&D), the center-left was holding onto 54% of the seats before the election. But, now they are down to 43% following Sunday’s results. Both the blocs have collectively lost more than 70 seats, according to NPR's Sylvia Poggioli.
And now, these blocs have to reach out to pro-Europe, business-friendly centrists to maintain authority in the EU. Pro-EU parties like the Alliance of Liberals and Democrats for Europe, known as ALDE, will look forward to increase their seats from 68 to 109, and they should be particularly thankful to Macron’s En Marche party for joining them.
At the same time, the Greens, a party coalition focusing on environmental issues, won 69 seats this time, way more than 52 won in 2014. The Greens saw gains in France, the Netherlands, Ireland, Finland, Denmark and Belgium, among others. The Greens is, thus, the fourth-largest voting bloc in the EU. This also shows that a growing number of Europeans are concerned about climate change and the environment. Nonetheless, Sweden’s Carl Bildt summed up by saying that “the Greens and the Liberals were the winners of the day.”
European Stocks Big Gainers After EU Elections
European stocks soared after pro-EU parties gained votes, while Eurosceptic parties did not gain as many votes as expected. What’s more, it’s now the center-right and left groups that have predominantly controlled European politics will now have to form coalition with pro-business centrists, something that bodes well for growth in the Eurozone region.
The pan-Continental Stoxx Europe 600 rose 0.2% to 376.78, after closing down 1.47% last week. In Germany, the DAX was up 0.3% to 12,052.92 following a 1.9% gain last week. France’s CAC 40 rose 0.3% to 5,335.21, after losing 2.2% last week and Italy’s FTSE MIB remained unchanged at 20,394.63.
Grab These 5 European Stocks Now
Given that the European stock market is hot following EU results, investing in some fundamentally-sound European stocks seems prudent at the moment. To top it, Euro-area economic confidence surprisingly improved this month, snapping nearly a yearlong streak of decline, per the European Commission. Such a feat was mostly driven by the strongest uptick in production expectations in more than six years.
We have, thus, selected five European stocks that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy).
L'Oréal S.A. LRLCY manufactures and sells cosmetic products worldwide. The company was founded in 1909 and is headquartered in Clichy, France. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 2.3% in the last 60 days. The company’s expected earnings growth rate for the current year is 6.2%, higher than the Cosmetics industry’s projected rally of 0.8%.
Kering SA PPRUY develops, designs, manufactures, markets, and sells apparel and accessories worldwide. The company was founded in 1963 and is based in Paris, France. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 1.1% up in the last 60 days. The company’s expected earnings growth rate for the current year is 9.1%, higher than the Retail - Apparel and Shoes industry’s estimated rise of 3.2%.
TOTAL S.A. TOT operates as an integrated oil and gas company worldwide. The company was founded in 1924 and is headquartered in Courbevoie, France. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has risen 2.1% in the last 60 days. The company’s expected earnings growth rate for the current year is 6.9%, higher than the Oil and Gas - Integrated - International industry’s expected rally of 4.3%. You can see the complete list of today’s Zacks #1 Rank stocks here.
Deutsche Telekom AG DTEGY provides integrated telecommunication services worldwide. The company was founded in 1995 and is headquartered in Bonn, Germany. The company has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has climbed 0.8% in the last 60 days. The company’s expected earnings growth rate for the current year is 7.1%, higher than the Diversified Communication Services industry’s projected rally of 4.6%.
Davide Campari-Milano S.p.A. DVDCY manufactures and trades in alcoholic and non-alcoholic beverages. The company was founded in 1860 and is headquartered in Sesto San Giovanni, Italy. The company has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved 3.8% north in the last 60 days. The company, which is part of the Beverages - Alcohol industry, is expected to see earnings growth of 7.4% next year.
In fact, L'Oréal, Kering, TOTAL S.A, Deutsche Telekom and Davide Campari-Milano have gained 19.4%, 15.8%, 2.4%, 0.2% and 18.1%, respectively, so far this year.
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