The European Response
The “Magnificent Seven” tech stocks have commanded attention for their market dominance, propelling U.S. markets to unparalleled heights. Yet, across the Atlantic, Europe boasts its supergroup – the GRANOLAS. Comprising household names in the investment realm, the GRANOLAS stand out for their focus on healthcare and consumer discretionary sectors, diverging from the tech-heavy Mag 7.
JPMorgan’s Take
JPMorgan, a stalwart in the financial realm, recently unveiled its top European stock picks, offering investors a foray into the Old Continent. Among these selections, three energy stocks take center stage, blending stability with dividend potential, an enticing mix in the realm of equities.
1. Eni S.P.A. (E)
Eni, an illustrious player in the energy sector since 1953, presents a compelling opportunity. With a global footprint and a market cap of $54.9 billion, Eni’s strategic expansions underscore its resilience in an ever-evolving market. While recent quarterly results may have faltered, Eni’s foray into biorefining and shareholder value augmentation through spinoffs herald a promising future.
The Value Proposition
JPMorgan’s endorsement of Eni shines a light on its reasonable valuation, with growth prospects pegged at a modest yet commendable 2% in 2025. Analysts echo this sentiment, labeling the stock a “Moderate Buy” with a projected upside of 11.7%, offering a silver lining amidst market fluctuations.
2. TotalEnergies Se (TTE)
Founded in 1924, TotalEnergies emerges as a global player in the energy domain, balancing a diverse portfolio with a market cap of $157.2 billion. Despite recent setbacks in earnings, TotalEnergies’ forward-looking approach, including a stake in SunPower, positions it favorably in a shifting energy landscape.
Analysts’ Verdict
JPMorgan’s outlook on TotalEnergies underscores a forward P/E ratio of 7 and an anticipated EPS growth of 4% in 2025. Analysts concur, issuing a “Moderate Buy” rating with a projected upside of 12.5%, painting a picture of cautious optimism in an uncertain market terrain.
The Bold Journey of Royal Dutch Shell
Weathering the Storms of Time
Royal Dutch Shell (SHEL) emerges as a stalwart in the ever-evolving landscape of the oil and gas industry. Established in 1907 through the union of the Royal Dutch Petroleum Company of the Netherlands and The “Shell” Transport and Trading Company of the UK, this behemoth stands as one of the world’s leading oil producers.
A Glimpse into the Present
The integrated oil and gas company, with its hands dipped in both upstream and downstream activities, alongside integrated gas and renewables, holds a commanding market capitalization of $204.9 billion. Despite a 2.5% dip in its stock value this year, SHEL offers sturdy dividends, with a yield of 4.38% – trumping its counterparts in the energy sector.
Adjusting its Sails
Recent earnings reports from SHEL reflect an EPS of $2.22, marking a 20.1% downturn from the previous year. Nonetheless, this figure surpasses market expectations. SHEL displays fiscal prudence by trimming its net debt levels by 3% to $43.5 billion. Furthermore, the company is strategically divesting stakes in its international ventures to strengthen its core operations.
Navigating New Waters
With a sharp pivot towards its Sparta project in the Garden Banks area off the Gulf Coast of Louisiana, SHEL is setting course for a promising future. This deep-water oil development initiative, slated for production in 2028, is projected to yield 90Mboe/d with an estimated 244MMboe in recoverable resources. Management aims to welcome 500Mbbl/d of fresh production by 2025.
Gauging Future Horizons
Market prognosticators at JPMorgan foresee a 5% growth in EPS for SHEL by 2025, supported by a forward P/E ratio of 7.7. Analysts paint a rosy picture for SHEL stock, branding it as a “Strong Buy.” The mean target price of $75.17 hints at an ascent of around 18% from its current standing. Out of 11 analysts scrutinizing the stock, 8 advocate a “Strong Buy,” while 3 suggest a “Hold” stance.