Three stocks to overcome Europe’s growth crisis

Europe is in a structural growth crisis, says professional investor Malte Heininger. But these three visionary companies have good long-term prospects.

A professional investor tells us where he'd put his money now. This week: Malte Heininger of Carmignac's Long-Short European Equities Fund.

Europe is in a structural growth crisis. The world is gradually shifting from the "old economy" to the "new", technology-driven one, and the European presence in this crucial sector is underwhelming, particularly among larger companies.On this side of the Atlantic there is a distinct lack of companies on a par with the FANGs (Facebook, Amazon, Netflix and Google, now Alphabet) major innovators that have upended traditonal markets and created new ones. Plenty of old-economy champions are feeling the cold winds of disruption thanks to digitisation and changing consumer behaviour.

Against this backdrop, investors need to look for the truly innovative, visionary companies with the ability to expand their presence in a low-growth environment and adapt to rapidly evolving circumstances. The winners will be those that boast strong business models and fundamentals in addition to leading products in underpenetrated markets.

Expanding overseas

One company that stands out in this context is Asos (Aim: ASC), a leading online apparel retailer in Europe. The outlook is encouraging: it has ample scope for growth in the next few years as the global online apparel sector is still underpenetrated.

What's more, Asos provides a first-class customer experience. The company's products are highly valued by clients, there is a huge assortment to choose from, and delivery times are fast. Asos also has a strong management team and a great track record of development. The company started in the UK, has expanded across Europe, and is now also entering the US.

Strong commitment to growth

Puma (Frankfurt: PUM) has also become avery compelling investment case. Although it is the number-three global sports brand with high brand recognition globally, it lags behind Nike and Adidas with only 2% market share. After experiencing success in the early 2000s, Puma then endured a difficult period, with rivals gaining market share in the keyrunning-shoe segment, for instance.

However, it has now turned the corner.In the last two and a half years, Puma's investment in its performance and promoting the brand has borne fruit:last quarter, it reported 22% organic growth with increasing margins. Moreover, the company is now also entering the North American market for basketball products in a move that demonstrates its commitment to future growth.

Attractive long-term prospects

Qiagen (Frankfurt: QIA), a fast-growing molecular diagnostics company, which addresses unmet medical needs through science and technology development, is another promising company. Healthcare as an industry lends itself to innovation, and given the non-cyclical aspect of the wider sector, biotechstocks will provide investors withstable returns in what is an increasingly volatile environment.

Qiagen has attractive long-term prospects given its strong positioning in growth markets such as biodata and companion diagnostics, and a high percentage of its revenues are recurring. We're not the only ones who foresee a bright future for Qiagen: the stock has outperformed the market so far in 2018.

Recommended

Beyond US tech stocks: three global stars to buy now
Share tips

Beyond US tech stocks: three global stars to buy now

There is much to like about the US tech giants, says professional investor Alec Cutler of Orbis Investments highlights. But there are many other excel…
1 May 2021
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
19 Feb 2021
Micro-cap stocks: how to get huge returns from tiny firms
Small cap stocks

Micro-cap stocks: how to get huge returns from tiny firms

Micro-cap stocks are often overlooked, but the British market has plenty of them and their potential is massive. Max King picks the best two investmen…
3 May 2021

Most Popular

What is hyperinflation and could it happen here?
Inflation

What is hyperinflation and could it happen here?

The Bank of England has been accused of the kind of money-printing that could lead to Zimbabwe-style hyperinflation. But that's very unlikely to happe…
4 May 2021
Copper has hit a ten-year high, but this could just be the start of a huge bull market
Industrial metals

Copper has hit a ten-year high, but this could just be the start of a huge bull market

The price of copper is at its highest for ten years. But supply constraints and a massive rise in demand mean it’s not going to stop there, says Domin…
5 May 2021
Micro-cap stocks: how to get huge returns from tiny firms
Small cap stocks

Micro-cap stocks: how to get huge returns from tiny firms

Micro-cap stocks are often overlooked, but the British market has plenty of them and their potential is massive. Max King picks the best two investmen…
3 May 2021