Leading European companies offer long-term growth prospects
Alexander Darwall, lead portfolio manager, European Opportunities Trust, picks three European companies where he'd put his money
Europe presents a mixed backdrop, with varied political priorities and differing fiscal positions across major economies. Yet many European companies are global leaders in their fields and continue to grow despite muted domestic GDP and new US tariffs. These firms often generate earnings well beyond Europe’s borders, operate in niche markets where expertise matters and provide essential products and services that remain in demand regardless of short-term uncertainty.
The European Opportunities Trust (EOT) invests in a focused number of “special” European businesses that the manager believes have limited downside and can grow consistently over many years. The trust looks for companies with strong competitive positions, global reach and business models that remain relevant through economic cycles, resulting in a portfolio that differs significantly from the index, the MSCI Europe. The following examples illustrate some of the qualities that EOT looks for in its investments.
Three European companies to consider
Gaztransport et Technigaz (Paris: GTT) designs specialist containment systems used in the transport and storage of liquefied natural gas (LNG). GTT’s technology is used in most of the world’s largest LNG carriers, reflecting decades of engineering expertise and strict safety certification standards that competitors have found hard to replicate. Global demand for LNG is expected to continue rising in the years to come.
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Following the lifting of the US moratorium on new LNG developments, 10 major liquefaction projects have now been approved worldwide, six of which are in the US. This should translate into a surge in demand for new LNG carriers fitted with GTT technology. We view this long wave of investment in LNG projects as a structural tailwind rather than a short-lived cycle.
Ryanair (Dublin: RYA), Europe’s leading low-cost airline, continues to deliver impressive growth. The company maintains the lowest cost base of any major airline and has widened its lead over rivals. The company has a strong balance sheet, allowing it to own rather than lease its aircraft, and to standardise its fleet and optimise maintenance practices, all of which contribute to keeping a lid on costs.
This creates a virtuous circle, whereby Ryanair can make bulk orders of next generation aircraft, which carry more passengers with better fuel efficiency. This cost advantage enables Ryanair to offer lower fares, attract more passengers and fill planes consistently, even when consumers’ budgets are tight. We see Ryanair as a structural winner in European aviation. The business continues to gain market share and remains resilient despite higher interest rates, elevated operating costs and fluctuating economic conditions.
Genus (LSE: GNS) is a global leader in animal genetics, helping farmers improve herds’ health and productivity through advanced breeding programmes. One of the most important long-term developments for the company is the US regulatory approval of its PRRS-resistant pig. PRRS, or porcine reproductive and respiratory syndrome, is a costly viral disease that weakens young pigs and disrupts breeding herds, leading to substantial losses across the industry.
A resistant herd can materially improve survival rates, yields and overall efficiency, offering producers clear economic value. Further regulatory approvals in the coming years are expected to be followed by commercial adoption. The scale of the US market and the global prevalence of PRRS provide a strong foundation for durable growth.
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