JP Morgan picks top 3 stocks to bet on Europe — TradingView

The “Magnificent Seven” tech stocks have been in the news lately because these mega-cap stocks have a huge impact on the overall returns of the entire market. The Mag 7 – A lineup that unofficially includes Nvidia’s mega-cap names NVDAMicrosoft MSFT,Amazon AMZNapple AAPLmeta metaalphabet Googletesla TSLA – In 2023, the market capitalization reached a staggering $5.1 trillion. In total, without the influence of the Magnificent Seven, U.S.-listed stocks would have risen just 12.6% last year, compared to 23.3% with returns included.

Not to be outdone by European markets, it has its own supergroup of influential stocks.Europe’s answer to the Magnificent Seven is “granolus,” a term first coined by Goldman Sachs in 2020. G.S.. Members of this powerful acronym include names familiar to all investors – GSK GSKRoche RubyASML ASMLNestlé NSRGYNovartis NVSNovo Nordisk NVOL’Oreal LRLCFLVMH LVMUYAstraZeneca AZNSAP SAP and sanofi SNY – However, GRANOLAS has a clearer tilt toward healthcare and consumer discretionary stocks than the tech-heavy Mag 7.

But for investors looking for attractive valuations and upside potential in this market, investment bank JP Morgan J.P.M. We recently took a look at our own top European stocks. Here we will introduce three of his stocks. Both are energy stocks that pay dividends.

1.Any SPA(E)

JP Morgan’s European stock priority list starts with Eni E. Founded in 1953 and focused on oil and gas exploration and production in Italy, the company has expanded internationally and become a leading integrated energy company. Its main sectors include exploration and production. gas and electricity. and refinement and marketing. It currently operates in 62 countries and currently has a market capitalization of $54.9 billion.

Eni’s US-listed shares are down 9.1% year-to-date. The stock’s forward dividend yield is 6.75%, higher than the sector median of 3.78%.

Eni’s latest quarterly results were disappointing as the company reported EPS of $1.06, down 32.7% for the year, missing consensus estimates. However, hydrocarbon production levels increased by 6% year-on-year to 1,708 koe/day from 1,617 koe/day in the same period last year.

In addition, Eni plans to add 300 new service stations and double its biorefining capacity to 3 million tons by 2025. To help unlock shareholder value, the company is also eyeing spin-offs of its “satellite” businesses, Plenitude and Any Sustainable Mobility, which focus on renewable energy and power generation.

The stock is reasonably priced for JPMorgan, valued at a forward price-to-earnings ratio of 6.3x, and analysts expect EPS growth of 2% in 2025.

Overall, analysts rate the stock a Moderate Buy, with an average price target of $34.55. This suggests an upside potential of approximately 11.7% from current levels. Of the 11 analysts covering the stock, 6 rate it a “strong buy” and 5 rate it a “hold.”

2. Total Energy Se (TTE)

Total Energy, founded in 1924 Tete is perhaps one of the world’s best-known integrated energy companies, with a diverse portfolio and numerous business segments, including exploration and production, integrated gas, renewable energy and power, refining and chemicals, and marketing and services. . Its market capitalization currently stands at a whopping $157.2 billion.

Total Energy stock is down 4.3% year-to-date. The stock has a forward dividend yield of 4.90% and a modest payout ratio of 35.4%, suggesting there is room for these dividends to grow.

In its latest quarterly results, TTE reported a 27.3% annual decline in earnings to $2.16 per share, which was below consensus estimates. However, sales of $54.77 billion exceeded Wall Street expectations.

Among TotalEnergies’ various businesses is a majority stake in SunPower. SPWR, a leading distributed solar power generation company in the United States. We develop rooftop systems and solar carport solutions for residential, industrial and commercial buildings. The actual penetration rate of rooftop solar in the U.S. is low at 4%, so there is still plenty of room for growth.

JPMorgan analysts expect the company’s EPS to grow 4% in 2025, with a forward P/E ratio of 7x.

Overall, analysts have rated the TTE stock a “fair buy” rating, with an average price target of $72.58. This suggests an upside potential of approximately 12.5% ​​from current levels. Of the 12 analysts covering the stock, 5 rate it a “strong buy,” 1 rate it a “fair buy,” and 6 rate it a “hold.”

3. Royal Dutch Shell (SHEL)

Rounding out the list is Royal Dutch Shell. shellwas founded in 1907 through the merger of the Dutch Royal Dutch Petroleum Company and the British Shell Transport and Trading Company. This integrated oil and gas company, which is one of the world’s largest oil producers (CLJ24), is engaged in both upstream and downstream activities, as well as the integration of gas and renewable energy. SHEL currently boasts a huge market capitalization of $204.9 billion.

Shell shares are down 2.5% year-to-date. The company’s stock has a dividend yield of 4.38%, which is higher than its energy sector peers. Also, the dividend payout ratio is low at 15.5%, so there is plenty of room for future dividend increases.

SHEL reported EPS of $2.22 in its most recent quarter, which is down 20.1% for the year, but still significantly beat consensus estimates. The oil major’s net debt level also fell 3% from a year ago to $43.5 billion.

Notably, the company has realigned its focus on its core businesses and gradually released its stake in overseas operations. This includes the termination of two offshore production sharing agreements in Malaysia’s Balam Delta, the sale of a 35% participating interest in the Masela field in Indonesia, the sale of a 51.8% interest in Aera Energy, and the sale of onshore operations in Nigeria. is included.

Instead, the company is focusing on its Sparta project in the Garden Banks area off Louisiana’s Gulf Coast. Sparta, a deep-sea oil development project, is scheduled to begin production in 2028, with recoverable resources of 244 million boe and expected production of 90 megaboe per day. In the short term, management expects he will start producing 500M barrels per day of new production by 2025.

JPMorgan analysts expect SHEL’s 2025 EPS growth rate to be 5% and future P/E ratio to be 7.7x.

Overall, analysts consider the SHEL stock to be a Strong Buy, with an average price target of $75.17, implying an upside potential of around 18% from current levels. Of the 11 analysts covering the stock, eight have a “strong buy” rating and three have a “hold” rating.

On the date of publication, Pathikrit Bose did not have (directly or indirectly) any positions in the securities mentioned in this article. All information and data in this article is for informational purposes only. For more information, please see the Barchart Disclosure Policy here.