3 Strong European Stocks for Long-Term Investors
Andrés is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The Eurozone crisis seems to have stabilized lately, but nobody feels too sure about how long this stabilization can last. It is quite likely we will see increasing recessionary pressures in the region during the following months, and austerity measures don´t help at all when demand for products and services is already weak. It is really hard to tell what the future will bring for Eurozone countries, and we certainly can´t rule out more economic problems on the horizon.
However, prices for some stocks in the old continent are already reflecting a lot of bad news; if things start improving the upside potential could be really attractive. For the time being, though, I think it´s better to focus on the strongest European companies, those with global reach, strong financial resources and attractive valuations. In other words, shares of companies that can be bought and held even if things continue to deteriorate.
Based in France, Total (NYSE: TOT) has a really attractive valuation for a big integrated oil and gas producer. The stock pays a juicy 5% dividend yield and trades at a P/E ratio of 7.5. In terms of Price / Free Cash Flow, valuation looks even more compelling since the ratio is below 5. The company is financially solid and keeps growing its business. And Total recently announced a joint venture with Chesapeake in the shale gas industry and also an agreement with Statoil to work together in the North Sea.
Siemens (NYSE: SI) is a multinational electrical engineering company based in Germany. The company rewards investors with a 3.1% dividend yield, and the stock trades at a Forward P/E ratio around 8.6 times next year average earnings estimate. Siemens has increased profit margins by restructuring operations in the last couple years, and the dividend has shown healthy growth rates since 2009. Infrastructure spending in emerging markets provides attractive growth opportunities for this company.
Unilever (NYSE: UN) is a truly global consumer products company with operations in more than 100 countries and sales in 180. The company owns leading brands in different products lines, including Sunlight, Surf, Comfort, Suave, Ben & Jerry’s, Skippy, Q-Tips, Promise, Slim-Fast, Popsicle and Axe among others. Unilever pays a 3.2% dividend yield and trades at a reasonable Forward Price / Earnings ratio of 14.2. This recession-proof business has been able to constantly increase dividends through good and bad economic times.
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