One of the stories for markets this year has been the outperformance of European stocks relative to U.S. ones.
Through Thursday, the S&P 500
has gained 7% in 2023, compared with a 10% advance for the Vanguard FTSE Europe ETF
Analysts at Goldman Sachs say the outperformance can continue, and one reason is highlighted in this chart.
The U.S. market is led by technology stocks, which are relatively scarce in Europe, but every single sector trades more cheaply in Europe than in the U.S.
The Goldman strategists say what they call GRANOLAS — the grouping of GSK
— are enjoying premium margins, while the margins of U.S. megacap stocks have come under pressure.
The GRANOLAS account for 23% of the market cap of the Stoxx Europe 600, while Facebook parent Meta Platforms, Amazon, Apple, Microsoft and Google parent Alphabet account for 18% of the S&P 500.