Granolas Stocks: what they are and differences with the Magnificent 7

One of the financial acronyms that has aroused the most interest in recent years is undoubtedly the 'GRANOLAS', a group of companies popularly known as the 'Magnificent Seven' of Europe and associated with long-term profitable investments. But, what are the GRANOLAS really? Are they really comparable to the Magnificent Seven? Is their performance as positive as everyone assumes? Keep reading and discover the answer to all these questions.

What are the GRANOLAS?

The GRANOLAS are a group of 11 high-quality, large-cap European companies, selected by Goldman Sachs analysts, which have the following common characteristics:

• Solid growth in profits
• Defensive
• Low volatility
• High margins
• Solid balance sheets
• Sustainable dividends
• Leaders in their sector

Goldman Sachs first used this term in a report published on April 28, 2020, in the final stages of the toughest period of the pandemic; according to what was indicated, while in the United States the long-term winning sector would have remained technology, in Europe the sectors with the best prospects were three: health, basic consumption and technology. Therefore, it indicated investing in GRANOLAS as a good long-term strategy.

Which companies are part of the GRANOLAS?

The 11 companies that are part of the GRANOLAS are Glaxo Smith Kline, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L'Oreal, LVMH, AstraZeneca, SAP and Sanofi.

Differences between the GRANOLAS and the Magnificent Seven of the United States

From the moment of their birth, the GRANOLAS group has been seen as the European equivalent of the Magnificent Seven, the seven technological giants of the United States; however, there are fundamental differences between one group and the other that every investor must keep in mind:

• The Magnificent Seven are composed exclusively of technological stocks, while the GRANOLAS cover a wide range of sectors.
• The GRANOLAS place greater emphasis on sustainable growth in the long term and dividends; the Magnificent Seven, on the other hand, are based on capital growth.
• The GRANOLAS are more exposed to global market trends, geopolitical tensions and currency fluctuations because their sales in Europe represent just 20%.

How have the GRANOLAS performed so far?

According to a Goldman Sachs analysis this year, the GRANOLAS have accounted for 60% of the total earnings of the European stock market in the last year. A Morningstar study reveals that the GRANOLAS have indeed offered, solid returns to investors, although slightly lower than those of the Magnificent Seven.

Are there investment funds on the GRANOLAS?

Although at the moment there are no investment funds or ETFs dedicated exclusively to the GRANOLAS, investors can try to invest in funds that follow the Euro Stoxx 50 index, such as the UBS (Lux) Equity Fund European Opportunity Sust or the Man GLG Pan-European Equity Growth, which offer exposure to the GRANOLAS and other prominent European values.

Similarly, some indexed funds that follow the Euro Stoxx 50 are the Amundi Euro Stoxx 50 UCITS or the Invesco Euro Stoxx 50 ETF.