about 1 year ago • 1 min
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.
Disclaimer: These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment advisor.