The Granola Effect

Long before cereal aisles were packed with choice, Dr. James Caleb Jackson created granola, the world’s first dry manufactured cereal in 1863. A century later, hippies revived the health conscious staple of rolled oats, seeds, nuts, and dried fruits in Vermont, making it so synonymous with the state that its residents are often called “crunchy” — short for "crunchy granola."

In the investing world, the word granola has an entirely different meaning. It refers in plural to a group of European stocks seen as the region's answer to the US Magnificent Seven (Mag7). Coined by Goldman Sachs during the 2020 European lockdown, GRANOLAS include GSK, Roche, ASML Holding, Nestlé, Novartis, Novo Nordisk, L’Oréal, LVMH, AstraZeneca, SAP, and Sanofi, the largest European companies by market cap at the time. As of today, this group boasts a combined market cap of $3.5 trillion, up half a trillion dollars since June 2024.

Meanwhile, the Mag7 comprised of Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla have a collective market cap of $17.3 trillion. After blockbuster years in 2023 and most of 2024 (largely driven by the AI boom), their performance so far in 2025 has been mixed, prompting investors to reassess their valuations.

On the other hand, GRANOLAS have quietly outperformed their US tech counterparts in valuation and earnings potential. Unlike the tech-heavy Mag7, the GRANOLAS are a diverse mix of industries, spanning AI, GLP-1 weight-loss drugs, luxury goods, pharmaceuticals, and enterprise software. Their global revenue diversification is another advantage. While the Mag7 generates about 50% of revenue from the U.S., GRANOLAS companies draw only a quarter from Europe, a third from the US, and the rest from international markets.

From a numbers perspective, GRANOLAS stocks look more attractive than Mag7. They are trading at nearly half the valuation (21.3x vs. Mag7’s multiple) while delivering higher expected earnings growth (30.2% in 2025). Part of the reason may be their commitment to execution.

While European CEOs typically earn less than their American counterparts and have fewer equity incentives, they adhere to a structured system of corporate norms that reward exclusivity. This often makes them less vocal and less accessible to investors compared to their US peers. However, this deliberate cultural distance isn’t necessarily a drawback, in fact it can enhance the appeal of leadership teams and their companies.

In business, as in any high-stakes environments, a sense of mystery can go a long way. In short, it creates intrigue and widens demand. Too much access to management can dilute authority, lead to micromanagement, and even introduce unnecessary volatility in stock performance as well as chaos in investor relations. Striking the right balance between accessibility and strategic distance is key to maintaining credibility and creating long-term value.

Like a well-made granola, European equities offer a balanced blend of resilience, diversity, and steady growth — proving that sometimes, the best investments aren’t the flashiest but the ones with less sugar.