European stocks stumbled early in the week as jitters over rising inflation, rising interest rates and tensions in Ukraine spilled over into the global stock market.
But Jason Hollands of trading platform Bestinvest was optimistic about the long-term outlook for European equities.
“Across Europe, profit margins are at near record highs as many companies have strong pricing power due to their very strong brands – such as Heineken, LVMH Moet Hennessy, L’Oréal and Richemont” , did he declare.
Samantha Gleave, co-manager of the Liontrust European Growth fund, agreed that big consumer brands were particularly attractive because of their ability to ride out rising costs. She pointed to the Danish jewelry seller pandora, whose stock price has risen 27% over the past year.
“She experienced organic sales growth in her prime of adolescence and improved her margins. It has also invested heavily in its online business, which has grown strongly due to the work-from-home trend,” she said.
Ms Gleave also pointed to automakers Stellantide, owner of the Peugeot and Fiat Chrysler brands, and Daimler, owner of Mercedes-Benz.
“These companies are reaping the benefits of pent-up consumer demand,” she said. “They also have very strong pricing power.”