Tim Lewis, Portfolio Manager, JPMorgan European Growth and Income
The summer of sport is truly upon us and as we enjoy the Euros, as a professional investor I cannot help but draw parallels to the world of investing. Building a stellar European investment portfolio is much like assembling a winning football team. The fundamentals are similar: each company in our portfolio has been thoughtfully selected for the qualities they offer. The line up must be diverse and balanced, with each complementing the other, ready to perform when needed. We must navigate uncertainty and weigh the risks. Sometimes, that means backing the lesser-known quantity with high growth potential rather than relying solely on the star player. The goal is to reach the end of the tournament, even if we must ride out a few volatile games to get there.
So, who makes our starting line up? Here is our team selection of Continental European companies from countries participating at this year’s tournament.
Goalkeeper
A safe pair of hands in the portfolio is Munich Re (Germany), with a business model based around assessing danger and minimising risk. Goalkeepers today also need to be a good distributor, and with a healthy pay-out ratio Munich Re fits the bill.
Centre-backs
Wienerberger (Austria), a manufacturer of bricks and concrete, stands firm as a rock-solid central defender. The company is benefitting from self-help measures and a turnaround in the European construction markets, and remains at attractive valuations. Partnering them is Nestle (Switzerland) a defensive ballast for many portfolios. Despite recent struggles due to pricing pressure, the consumer staples business looks attractive as consumer behaviour is normalising and management forecasts an improving market backdrop.
Full-backs
We need our full backs to bring energy, to get up and down the touch line and supply the rest of the team. RWE (Germany) is a utility company with ambitious renewable energy plans, with 8.3GW of green capacity under construction today. Volatile energy prices are boosting near-term profits, which are being reinvested into a substantial renewables portfolio to fuel their future growth. Few excel in supply chain management like Inditex (Spain). As the owner of renowned brands such as Zara, they employ a proximity supply-chain model that allows them to swiftly adapt to consumer trends.
Midfield
For midfield, we need balance – a workhorse, a connector, and that vital cog that makes everything tick. Safran (France), an aircraft equipment manufacturer, fits the engine room role perfectly. With its standout LEAP engine, Safran is winning market share as its main competitor struggles. Prysmian (Italy), a global leader in energy and industrial cables, connects offshore wind farms to the electrical grid. This positions them as a leading facilitator of the energy transition and digital transformation. ASML (Netherlands), the monopoly provider of lithography equipment, is essential for creating the leading-edge semiconductor chips needed to power the AI revolution. There is arguably no more vital cog in today’s global economy.
Wingers
Adidas (Germany) has been keeping Leo Messi in boots for almost twenty years. The business is seeing incredible momentum, boosted by the success of their terrace shoe range. As overall market oversupply returns to equilibrium, Adidas stands to gain from reduced competitor discounting in the future.
For creativity, look no further than Publicis (France), the media and advertising business. By harnessing data to better meet their clients’ needs and win market share, Publicis demonstrates the importance of a data-driven approach in creative industries.
Centre Forward
It could only be Novo-Nordisk (Denmark). The largest stock in our market, and the subject of intense media and investor focus thanks to their pioneering weight-loss drug Wegovy. Expectations are high, but thankfully Novo-Nordisk has time and again beaten even the most optimistic of forecasts showing it is a stock that can handle the pressure and the one to lead the line for our Euro 2024 portfolio.
In building our investment lineup, we’ve identified companies poised to capitalise on Europe’s economic resilience and structural long-term opportunities. Whether safeguarding stability like Munich Re, or leading innovation like Publicis, these firms epitomise Europe’s ability to tackle challenges and help investors reach their long-term goals.
