Looking to add European stocks to your portfolio? The European stock market showed great improvement in 2012. Will we see a similar performance in 2013? With this in mind, we created a list of high growth European stocks that may be considered undervalued by popular fundamental indicators.
To create the list below, we started by screening European stocks with market caps above $300 million for those with a PEG below 1 and P/E ratio below 15. Low P/Es are attractive because nobody wants to overpay for good growth - although this number may indicate there is little growth at all.
To find stocks with high growth expectations, we then screened for names with 5-year EPS growth projected at 15% or higher. We were left with the six names listed below.
A Closer Look
We looked at Ensco Plc. (ESV) in more detail. The company is expected to report its fourth quarter and full-year 2012 earnings on February 21st, 2013. As per sell-side analysts, the company is expected to report fourth quarter earnings of $1.29, and revenues of $1.09 billion. This is equivalent to a 9% increase in annual revenues.
As of September 30th, 2012, the company has cash & cash equivalents of $160 million, and long-term debt of $4.8 billion.
Additional liquidity is in the form of a $1.45 billion credit facility due May 2016. The company is required to maintain a debt-to-capital ratio of under 50% in order to avoid a covenant violation. The total debt-to-capital was 29.4%, a slight improvement from the 31.7% in December 2011. As of September 30th, 2012, Ensco has zero outstanding debt under the facility.
More importantly, this credit facility can be used for "general corporate purposes," which essentially means that it can be used to pay down outstanding debt or the day-to-day operations of the business.
The stock is trading around $63 versus its 52-week high of $65.19. It trades with a P/E multiple of 11.93 times versus Diamond Offshore (DO) at 16 times, and Nabors Industries (NBR) at 9 times. Ensco stock is up 16% in the past 1-year. Is the upside close to the end?
For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.
As a recap, the stocks listed below have: EPS Growth next 5 years>15%, PEG <1, and P/E <15, a market cap above $300 million, and are based in Europe.
Do you think these names are currently undervalued?
1. AEGON N.V. (AEG): Provides life insurance, pensions, and asset management products and services worldwide.
- Market cap at $12.31B, most recent closing price at $6.24.
- P/E: 8.91. PEG: 0.47. EPS growth for the next 5 years: 18.90%. Netherlands.
2. Delphi Automotive PLC (DLPH): Produces electrical and electronic, powertrain, safety and thermal technology components for automobile and commercial vehicle manufacturers.
- Market cap at $12.17B, most recent closing price at $38.31.
- P/E: 10.16. PEG: 0.49. EPS growth for the next 5 years: 20.79%. United Kingdom.
3. Ensco plc : Provides offshore contract drilling services to the oil and gas industry.
- Market cap at $14.6B, most recent closing price at $62.86.
- P/E: 12.35. PEG: 0.46. EPS growth for the next 5 years: 27.10%. United Kingdom.
4. Navios Maritime Holdings Inc. (NM): Operates as a seaborne shipping and logistics company in Greece.
- Market cap at $389.23M, most recent closing price at $3.80.
- P/E: 13.57. PEG: 0.85. EPS growth for the next 5 years: 16%. Greece.
5. Siemens AG (SI): Operates in the industry, energy, and healthcare sectors worldwide.
- Market cap at $90.99B, most recent closing price at $103.28.
- P/E: 13.17. PEG: 0.37. EPS growth for the next 5 years: 35.40%. Germany.
6. Tenaris SA (TS): Engages in the manufacture and sale of steel pipe products.
- Market cap at $23.49B, most recent closing price at $39.79.
- P/E: 13.49. PEG: 0.76. EPS growth for the next 5 years: 17.67%. Luxembourg.
*Profitability and institutional data sourced from Fidelity, price and accounting data sourced from Google Finance, all other data sourced from Finviz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.