Three innovative European companies that are set for long-term growth

Europe offers fertile ground for investors, says Mark Denham, head of European Equities at Carmignac. Here, he picks there e of his favourite stocks

We firmly believe that Europe offers fertile ground for investors. Investors unnerved by political and economic uncertainty have overlooked many opportunities. The most reliable way to uncover companies with the best long-term growth prospects is to seek out “compounders”: names that score highly in terms of sustainable profitability, reinvestment for the future and Socially Responsible Investing (SRI). 

Secular growth is what we look for and innovation is what will sustain it in the long run. Innovation can be found in an array of sectors. For example, as the stocks below illustrate, it is widespread within the healthcare industry; it is at the core of the biotech sector and it is key for selected industrials.

Subscribe to MoneyWeek

Become a smarter, better informed investor with MoneyWeek.

Novo Nordisk: defeating diabetes 

Novo Nordisk (Copenhagen: NOVOB) is a global healthcare company headquartered in Denmark. It boasts more than 95 years of innovation and leadership in diabetes care, fuelled by a strong research and development pipeline. 

The company is expanding its global leadership position in obesity, while it is also active in combatting other serious chronic diseases, such as haemophilia and growth disorders. 

Advertisement - Article continues below

Given growing price pressure on diabetes treatment, Novo Nordisk has invested heavily in research and development in order to come up with an oral version of its diabetes treatment (diabetes drugs are normally injected). This product will grow the overall diabetes drug market by offering a different treatment, while it will also provide competition for other types of oral drug.

Galapagos: a biotech set to bounce

Contrary to popular belief, there are several reasonably sized biotech names in Europe that have the potential to do better than their benchmarks. 

One name that performed nicely in 2019 and presents the long-term prospects we look for is Galapagos (Amsterdam: GLPG). Galapagos is a medium-sized clinical stage biotechnology company specialising in the discovery and development of small-molecule and antibody therapies (designed to boost the body’s immune system). 

The company’s research mainly focuses on inflammation, fibrosis and metabolic problems. It aims to begin six or seven new projects a year and has an active portfolio of around 30 projects.

Assa Abloy: lock in profits

Assa Abloy (Stockholm: ASSAB) is the world’s leading producer of locks. The company manufactures a wide range of mechanical and electrical locks, as well as more sophisticated access and identification systems. It not only meets our financial criteria, but also stands out owing to its quest for innovation. 

Assa Abloy is constantly renewing its product range, to the extent that it has even set a target: 25% of its turnover should stem from products launched within the last three years. Its most recent innovation is the “smart lock”, a device that locks and unlocks doors remotely – by using a smartphone, for instance. 

Advertisement - Article continues below

Assa has also formed a partnership with Amazon that allows parcels to be delivered when the customer is absent. Given that there are almost 40 million users of the Amazon Prime service, we believe this innovative product has huge potential.



UK Economy

How the BBC can survive the end of the TV licence

Th TV licence that funds the BBC is looking way past its sell-by date, says Matthew Lynn. Here's how it could survive without it
16 Feb 2020

Coronavirus is a "black swan" event for oil

The coronavirus outbreak is leaving the energy industry facing the prospect of no overall demand growth for the calendar year. 
15 Feb 2020
Global Economy

Have we reached the end of the road for petrol cars?

The prime minister has said that all new sales of vehicles with internal combustion engines will be banned from 2035. Is that achievable?
15 Feb 2020
Global Economy

The charts that matter: markets don’t know which way to turn

With investors continuing to worry about the coronavirus and the threat of higher inflation in the US, John Stepek looks at what that's done to the ch…
15 Feb 2020

Most Popular

UK Economy

Britain has a new chancellor – get ready for a major spending splurge

The departure of Sajid Javid as chancellor and the appointment of Rishi Sunak marks a change in the style of our politics. John Stepek explains what's…
14 Feb 2020

Money Minute Friday 14 February: The latest from RBS, Britain's state-owned bank

Today's Money Minute previews results from RBS – Britain’s state-owned bank – and from pharma giant AstraZeneca.
14 Feb 2020

Living on a houseboat: the pros and cons of a floating home

Living on a houseboat sounds romantic and peaceful. But it’s not as straightforward as it looks, says Nicole Garcia Merida
14 Feb 2020

Why investors shouldn’t overlook Europe

SPONSORED CONTENT - Ollie Beckett, manager of the TR European Growth Trust, tackles investor questions around Europe’s economic outlook and the conseq…
6 Nov 2019