The "Magnificent Seven" tech stocks have been a big part of the US market rally. You know them well: Apple, Meta, Nvidia, Tesla, Amazon and Microsoft.
But there's a rival group of companies powering European stocks to new heights with even better returns, by some measures, my colleague Anna Cooban reports from across the pond.
They've been christened with the rather unfortunate acronym "Granolas," roughly encompassing 11 companies: GSK, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L'Oréal, LVMH, AstraZeneca, SAP and Sanofi.
Those stocks accounted for 60% of the gains on Europe's benchmark index over the past 12 months. They have even slightly outperformed the Magnificent Seven over a longer period, according to Goldman Sachs.
"They are a large part of the reason why European equities have performed well despite lackluster domestic GDP," Goldman Sachs analysts wrote in a note earlier this month.
Over the past three years, investors in the Granolas have enjoyed a total return — which includes share price gains and dividends — of 65% on average, slightly above the 64% delivered by the Magnificent Seven, Goldman Sachs analyst Guillaume Jaisson told CNN.
The Granolas' shares have, on an unweighted average, risen nearly 18% over the past 12 months — more than double the 7.3% increase notched by the pan-European index, according to CNN calculations.
The top performer was — no surprise here — Novo Nordisk, the Danish drugmaker whose stock has soared 65% over the past year thanks to its blockbuster weight loss drugs Ozempic and Wegovy.
Their success may, however, be a double-edged sword for European markets.
Their standout performance has "raised the issue of concentration effects" in the region's stock market, says Philip Lawlor, managing director of markets research at Wilshire Indexes.
In other words, investors — many of them investing passively via exchange-traded funds — will continue to plow money into the 11 big companies at the expense of smaller firms.
"As more and more money gets sucked into markets through passive vehicles, it encourages more and more money to get sucked into big stocks," Lawlor said, adding that the Granolas' success would in this way become "a self-fulfilling prophecy."
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- Drugs like Ozempic and Wegovy are expected to boost US economic output by a trillion dollars over roughly the next four years, according to Goldman Sachs.
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