Profitable niches in Europe

Europe and its economic problems have been in the news for all the wrong reasons in recent years. But many European smaller companies look attractive, says professional investor sam Cosh. Here, he picks three of his favourites.

Asked to describe the ideal investing conditions, I'd mention the following: lots of companies to choose from, across a range of countries and industries;a market that is poorly researched and understood, giving greater scope to gain advantage through doing our own research; and the opportunity to find companies with real potential ahead of the crowd, and so generate significant outperformance. All of these factors can be found relatively close to home in the European small-cap market.

Europe and its economic problems have been in the news for all the wrong reasons in recent years. But anyone focusing on the big picture would be missing out on some really interesting, profitable opportunities. Many European smaller companies look attractive relative to both their history and to other regional markets. Investing in smaller firms is often seen as involving greater levels of risk than investing in larger stocks, including problems with liquidity (the ability to buy and sell quickly and inexpensively). However, I would argue that because of the sheer number of opportunities available, we can find niche businesses that can grow whatever the economic conditions. Many European small caps also do business successfully around the world another positive when conditions are tough at home.

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