Don’t Be a Sap: Check Out SAP and Other Euro Stocks – Despite the Crisis There

It has gotten this bad for Europe: start typing eurozone into Google search and the auto fill options are eurozone crisis, eurozone collapse and eurozone debt crisis.

Amid that backdrop you might think that the European stock market is in a total freefall. It’s not.

FEU Chart

FEU data by YCharts

Granted, that’s a whole lot of volatility, all for a 1% loss for the full year. The chart would have been even uglier if not for ECB president Mario Draghi’s late July vow that the currency coalition would hold-a declaration of interdependence, which set off a rally.

FEZ Chart

FEZ data by YCharts

Given the groundhog day aspect to how the sovereign debt crisis has played out, there is of course no guarantee resolution will happen, or happen soon. But to completely steer clear of European stocks until it does resolve means missing out on some intriguing opportunities.

For example, over the past year Germany’s SAP (SAP), Bayer and Daimler are all up about 30%.

The only thing falling precipitously at SAP seems to be its PE ratio.

SAP PE Ratio Chart

SAP PE Ratio data by YCharts

France’s L’Oreal gained 29% over the past year, and LVMH Moet Hennessy Louis Vuitton is up 25%.

While all those stocks are based in Europe, they are all leading global brands. Business may not be booming at home, but there seems to be plenty of other markets to sell into. In fact, if you exclude the battered financials from the Stoxx Euro 50 index, the one-year gain is 28% for the rest of the index, just 1 percentage point less than the S&P 500.

Value investors should give the euro energy sector a look. Total (TOT) and Royal Dutch Shell (RDS.B) have price/earnings ratios below 8 and earnings yields that nudge out Exxon Mobil (XOM).

TOT Earnings Yield Chart

TOT Earnings Yield data by YCharts

Both Total and Royal Dutch Shell are currently rated attractive on YCharts Pro.

Carla Fried is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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