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
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
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.

Advertisement

Recommended

Visit/personal-finance/mortgages/601087/beware-a-mortgage-holiday-is-not-free-cash
Mortgages

Beware: a mortgage holiday is not free cash

You are piling up debt for the future if you pause your mortgage payments, says Ruth Jackson-Kirby.
6 Apr 2020
Visit/investments/investment-strategy/income-investing/601115/heres-how-to-hold-on-to-some-dividend
Income investing

Here’s how to hold on to some dividend income

Companies are cutting their dividends. But the truth is that you don’t have to give up all of your dividend income, says Merryn Somerset Webb. Here’s …
6 Apr 2020
Visit/economy/global-economy/601114/whos-going-to-pay-for-the-war-on-coronavirus
Global Economy

Who’s going to pay for the war on coronavirus?

Central banks and governments are throwing money at coronavirus to stem the pandemic and prop up their economies. But who's actually footing the bill?…
6 Apr 2020
Visit/trading/601091/trading-you-can-be-sure-of-shell
Trading

Trading: you can be sure of Shell

Oil won’t stay low forever – and Anglo-Dutch oil giant Shell looks both lean and cheap.
5 Apr 2020

Most Popular

Visit/investments/property/601110/house-prices-and-covid-19
Property

House prices and Covid-19

The housing market is in deep freeze – what happens when it thaws out?
5 Apr 2020
Visit/investments/property/601081/three-things-matter-for-the-uk-housing-market-now-and
Property

Three things matter for the UK housing market now – and “location” isn’t one of them

The UK housing market is frozen. And when it does eventually thaw out, the traditional factors that drive prices will no longer apply. The day of reck…
1 Apr 2020
Visit/investments/property/601065/what-does-the-coronavirus-crisis-mean-for-uk-house-prices
Property

What does the coronavirus crisis mean for UK house prices?

With the whole country in lockdown, the UK property market is closed for business. John Stepek looks at what that means for UK house prices, housebuil…
27 Mar 2020
Visit/economy/global-economy/601106/the-moneyweek-podcast-russell-napier-how-much-debt-is-too-much
Global Economy

The MoneyWeek Podcast – Russell Napier: how much debt is too much?

Merryn talks to financial strategist and author Russell Napier about the huge levels of debt embedded in the global economy, the governmental response…
3 Apr 2020