A Close Look at the Narrow Slice of European Growth
Wednesday is potentially a big day for Europe, and potentially a big opportunity for investors. At 5 a.m. ET Eurostat will release its preliminary estimate for Eurozone GDP, and economists forecast a return to growth after six quarters of contraction (the longest recession since WWII).
The estimated gain of 0.2 percent is a fraction of the 1.7 percent rate seen in the U.S.. European growth is still fairly narrow, as only 102 companies in the Euro Stoxx 600 are witnessing sales growth greater than 10 percent. Roughly half are growing less than 10 percent, and about a third are still contracting:
We focus on the 102 companies growing at least 10 percent. Three sectors account for about one third of the group: Financials, industrials and consumer stocks. Curiously, technology and health care are virtually absent from the list (unlike the U.S. where health care has been especially strong due to broader patient coverage under the Affordable Care Act).
Here are the three fastest-growing companies in each sector. Note how many are from the U.K.:
Blog readers will also appreciate some additional insight from our research: 17 of Europe's 20 fastest-growing financial companies are either based in the U.K. or Switzerland, so health in the banking sector is still highly concentrated. The three exceptions: Bank of Ireland (BKIR ID), Exor (EXO IM), Unibail-Rodamco (UL NA).
The next three fastest-growing consumer companies are all consciously expanding their businesses, which demonstrates individual "stories" are as important as secular improvement: Paddy Power (PWL ID), Rightmove (RMV LN), Casino Guichard (CO FO).