European GRANOLAS

It turns out Europe has its Magnificent…11. The acronym is GRANOLAS, which somehow doesn’t sound that appetizing to me. At least the US “Magnificent 7” has a classic Western movie ring to it. Maybe they should have just called them the Magnifique 11?

Important Note: I have written 72 Equity Sanity editions so far. This one makes it 73. It’s been fun, but I have decided to end this newsletter at lucky number 75 (so that's 2 more issues). Going forward, please follow The Buylyst for regular analysis and insights like this.

I’m not sure if there is one definitive list of “European dominator” stocks, but I found this GRANOLAS list in a Morningstar article, so I’ll take it on face value. Would I invest in the Magnifique 11 or GRANOLAS (by the way, where’s the “O”)?

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In the chart below, I pulled out the final Upside Viability Scores of the GRANOLAS from The Buycaster – the scores quantify how rational it is for me to believe that each of these stocks will deliver my desired return: 80% cumulative return within 5 years or 12.5% CAGR.

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These scores are based on deep-dive analysis of each company’s cash flows, margins, cost structures, and market multiples. I won’t get into the details of the calculation but the most important metric driving these scores is The Buycast – revenue growth we need to believe to rationally expect the stock to deliver our desired return.

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For context, here’s Sanofi’s Buycast. It scores high because it doesn't require us to assume the moon and the stars to - rationally - expect our desired return.

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More details about Sanofi and 6,000 other stocks in The Buycaster.

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As a basket, this group looks about as appetizing as a crumbly granola bar. Individually, however, this chart from The Buycaster tells me one of two things:

1. I should spend my researching time on AstraZeneca and Sanofi OR
2. If I’m already confident about AstraZeneca or Sanofi, the high Upside Viability Scores tell me that the stocks may be good buys (not goodbyes).

Use The Buycaster to either prioritize your research efforts or do a numerical Sanity Check on your subjective view of a company. Either way, consider the number-crunching done.

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Hope this helps.

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Many Happy Returns,

Saurav

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P.S. None of the contents of this newsletter should be construed as Investment Advice. Please do your own research – tools such as The Buycaster and The Fundcaster are designed to help you do just that.