FAAMGs Are Exciting, But GRANOLAS Look Healthier

FAAMGs Are Exciting, But GRANOLAS Look Healthier
Stéphane Renevier, CFA

about 1 year ago1 min

Mentioned in story

Assuming you’ve not been living in a cave, you’re probably aware of the importance of the FAAMG stocks (Meta’s Facebook, Amazon, Apple, Microsoft, and Google’s Alphabet) in US stock markets: they represent about one-fifth of the S&P 500, their earnings outstripped the broader market by a factor of 10x over the past decade, and their margins are twice as juicy. It’s no wonder really that retail and pro investors alike give over a big part of their portfolios to these giants.

But it might be time to make some space for the GRANOLAS. The acronym, dubbed by Goldman Sachs, refers to the companies that now account for a quarter of Europe’s STOXX 600 index: GlaxoSmithKline, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L'Oréal, LVMH, AstraZeneca, SAP, and Sanofi.

Sure, these companies don’t boast the jaw-dropping growth rates the FAAMG stocks have seen, and they’re a lot less likely to make headlines. But they do enjoy similarly attractive margins, stable earnings growth, and healthy dividends. And those things, along with their “value” characteristics, make them well-placed to benefit from a recovery in economic growth, and less dependent on whatever happens with inflation, interest rates, and overall sentiment. So feel free to load up on FAAMGs for your sugar rush, if you’re a believer, but consider making space in your portfolio’s diet for some healthy GRANOLAS too.

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