In this piece, we will take a look at the 12 most profitable European stocks. If you want to skip our overview of the European economy and the latest trends, then take a look at the 5 Most Profitable European Stocks.
The economic impacts of the 2022 Russian invasion of Ukraine coupled with the consequences of lax monetary policies necessitated by the coronavirus lock downs have ushered in a new economic status quo in 2023. This has seen the business environment become markedly difficult, especially since the higher rates constrict business activity and make consumer borrowing and purchases difficult.
This new economic status quo has led to slow economic growth and depressed markets, with the outlook remaining unclear as we start to exit 2023. Throughout this year, investors in Europe, just like their counterparts and peers in the United States have on the Federal Reserve, have focused on the European Central Bank and the Bank of England to try to decipher when interest rates might come down. However, unlike the U.S., economic growth in Europe has been more muted, which has raised hopes that the rates might come down sooner as central banks become wary of inflicting permanent damage on the economy.
Yet, December 2023 proved to be a disappointing month for investors who were hoping for the rate cuts. Starting from the European central bank, President Christine Lagarde stressed in mid December that talk about rates going down might be a bit early since there are risks of inflation increasing again. Europe, unlike the U.S., relied on cheap Russian fuel for a large portion of its energy requirements and was forced to scuttle and look for alternatives such as liquefied petroleum gas (LPG) last year to prevent funding the Russian war effort. Consequently, prices rose much more sharply in the region than they did in the U.S., creating a much different economic landscape for the ECB than for the Fed.
Ms. Lagarde’s comments were still stunning, as she shared that during their latest meeting to decide European interest, the policymakers did not consider interest rate cuts at all. The fact that European inflation as a whole stood at 2.4% in November made this omission quite striking, but perhaps a high core inflation of 3.6% helped inform their opinion. Not to mention, analysts also expect that inflation might tick higher in the future due to tax changes and other reasons.
This refusal to feed into the dovish sentiment was also present in remarks made by the Bank of England’s Governor, Andrew Bailey. Mr. Bailey’s country was one of the hardest hit countries by the 2022 energy crisis, with natural gas prices in the U.K. rising to unsustainable levels, creating a lot of pain for small businesses and ordinary people. The BOE has been raising interest rates for quite a while, and its December Monetary Policy Meeting saw a vote of 6-3 to keep interest rates at 5.25%. The three dissenters provided a strong hawkish tone, as all of them voted to further increase interest rates in the U.K. by 25 basis points. Governor Bailey added fuel to the fire in a post meeting press conference as he shared that he could not be certain about rates not going up in the future.
Further details were present in the BOE’s monetary policy statement which shared:
The MPC will continue to monitor closely indications of persistent inflationary pressures and resilience in the economy as a whole, including a range of measures of the underlying tightness of labour market conditions, wage growth and services price inflation. Monetary policy will need to be sufficiently restrictive for sufficiently long to return inflation to the 2% target sustainably in the medium term, in line with the Committee’s remit. As illustrated by the November Monetary Policy Report projections, the Committee continues to judge that monetary policy is likely to need to be restrictive for an extended period of time. Further tightening in monetary policy would be required if there were evidence of more persistent inflationary pressures.
But what about economic growth? After all, interest rates and economic growth go hand in hand, and on this front, Europe’s largest economy is continuing to struggle. The latest bit on the German economic front has seen the DIW Institute predict that the German economy will grow by 0.6% in 2024 and 1% in 2025. These estimates are lower than the previous ones, and a key reason behind the DIW’s bearishness is its belief that budget cuts that reduce industrial stimulus – particularly for climate technologies – will lead to lower growth.
Looking at all these details, it’s clear that the European economy has entered a new status quo. So, we decided to take a look at the most profitable European stocks with some notable picks being Shell plc (NYSE:SHEL), UBS Group AG (NYSE:UBS), and HSBC Holdings plc (NYSE:HSBC). For more European companies, you can read 15 Largest European Companies by Revenue.
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Our Methodology
To make our list of the most profitable European stocks, we ranked all European firms trading on the NYSE or NASDAQ by their market capitalization and then ranked the 30 biggest firms with their trailing twelve month net income.
Most Profitable European Stocks
12. Unilever PLC (NYSE:UL)
Latest TTM Net Income: $9 billion
Unilever PLC (NYSE:UL) is a British corporate giant that sells household and personal care products. The firm is currently facing the heat from the U.K.’s Competition and Markets Authority (CMA) which is concerned that Unilever PLC (NYSE:UL) might have overstated the environmental friendliness of its products.
By the end of this year’s third quarter, 21 out of the 910 hedge funds part of Insider Monkey’s database had bought and owned Unilever PLC (NYSE:UL)’s shares. Ken Fisher’s Fisher Asset Management is the firm’s biggest hedge fund shareholder in our database due to its $488 million investment.
Along with UBS Group AG (NYSE:UBS), Shell plc (NYSE:SHEL), and HSBC Holdings plc (NYSE:HSBC), Unilever PLC (NYSE:UL) is a profitable European stock.
11. Sanofi (NASDAQ:SNY)
Latest TTM Net Income: $9.88 billion
Sanofi (NASDAQ:SNY) is a French pharmaceutical company headquartered in Paris, France. It scored a major contract in December 2023, after it agreed to supply more infant respiratory virus vaccines to the U.S. after a shortage had left many patients out of the loop.
During 2023’s September quarter, 29 out of the 910 hedge funds profiled by Insider Monkey held a stake in the company. Sanofi (NASDAQ:SNY)’s largest stakeholder among these is Ken Fisher’s Fisher Asset Management as it owns $801 million worth of shares.
10. Banco Santander, S.A. (NYSE:SAN)
Latest TTM Net Income: $10.86 billion
Banco Santander, S.A. (NYSE:SAN) is one of the biggest banks in the world with more than two hundred thousand employees. It is currently expanding its presence in North America, after announcing to take over BNP Paribas’s asset management operations in Mexico in December 2023.
Insider Monkey took a look at 910 hedge fund portfolios for their September quarter of 2023 investments to find 14 Banco Santander, S.A. (NYSE:SAN) shareholders. Jim Simons’ Renaissance Technologies was the biggest investor as it held a $11.6 million stake.
9. Novo Nordisk A/S (NYSE:NVO)
Latest TTM Net Income: $11.08 billion
Novo Nordisk A/S (NYSE:NVO) is a major Danish pharmaceutical firm that sells treatments and drugs for diabetes and other ailments. Despite being quite optimistic about the market size of its weight loss drug, TD Cowen cautioned that the financial impacts of weight loss drugs are far from being clear.
As of Q3 2023 end, 51 out of the 910 hedge funds covered by Insider Monkey’s research were the firm’s shareholders. Novo Nordisk A/S (NYSE:NVO)’s largest hedge fund shareholder is Jim Simons’ Renaissance Technologies due to its $1.4 billion investment.
8. British American Tobacco p.l.c. (NYSE:BTI)
Latest TTM Net Income: $11.1 billion
British American Tobacco p.l.c. (NYSE:BTI) is a British firm that is part of the big tobacco club. December provided concerning news to the firm’s investors, as its shift to become an e-cigarette company was dealt a setback as the World Health Organization (WHO) called for tighter regulatory scrutiny.
Insider Monkey dug through 910 hedge fund holdings for their third quarter of 2023 shareholdings and found that 17 had invested in British American Tobacco p.l.c. (NYSE:BTI). William B. Gray’s Orbis Investment Management was the biggest investor as it held $211 million worth of shares.
7. Equinor ASA (NYSE:EQNR)
Latest TTM Net Income: $17.1 billion
Equinor ASA (NYSE:EQNR) is the state owned Norwegian oil company that is one of the biggest players in its industry. The firm’s shares are rated Strong Buy on average and analysts have set an average share price target of $36.10.
During this year’s September quarter, 14 out of the 910 hedge funds covered by Insider Monkey had bought the firm’s shares. Peter Rathjens, Bruce Clarke, and John Campbell’s Arrowstreet Capital was the largest shareholder among these due to its $298 million investment.
6. TotalEnergies SE (NYSE:TTE)
Latest TTM Net Income: $19.5 billion
TotalEnergies SE (NYSE:TTE) is a French oil and gas behemoth. It is busy expanding its presence in the renewable energy industry these days after kicking off the construction of a massive 216 megawatt solar power plant in South Africa.
21 out of the 910 hedge funds part of Insider Monkey’s Q3 2023 database were TotalEnergies SE (NYSE:TTE)’s investors. Ken Fisher’s Fisher Asset Management was the firm’s biggest investor through its $1.3 billion stake.
TotalEnergies SE (NYSE:TTE), Shell plc (NYSE:SHEL), UBS Group AG (NYSE:UBS) and HSBC Holdings plc (NYSE:HSBC) are some highly profitable European stocks.
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Disclosure: None. 12 Most Profitable European Stocks is originally published on Insider Monkey.
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