This grouping of titles has actually kept pace with the Magnificent Seven

For all the attention paid to the tech giants nicknamed the Magnificent Seven, there is another group that has managed to keep pace with them, and with much lower risk.

It is called GRANOLAS, a term coined by Goldman Sachs during 2020 to refer to the largest European companies of the time: GSK GSK,
Nestlé CH:NESN,
Novartis CH:NOVN,
Novo Nordisk NGO,
L’Oréal FR:OR,
and Sanofi SNY.

This chart shows, in terms of total return since January 2021, that GRANOLAS Group has kept pace with AMZN’s Magnificent Seven,
Apple AAPL,
GOOGL alphabet,
Meta Platforms META,
Nvidia NVDA
and Tesla TSLA,
with a return of 63% and a volatility since 2018 that is on average twice as low.

They are much cheaper than the Mag 7, trading at 20 times earnings versus 30, although GRANOLAS are more expensive for the broader European market.

This group had a strong reporting season in the fourth quarter, led by Novo Nordisk’s success with weight-loss drugs and ASML’s surge in microchip equipment manufacturing, although L’Oreal disappointed in part due to his difficulties in China.

“In our view, the reason this group of stocks trades at a premium to the market is that they offer strong (and predictable) growth,” said strategists led by Guillaume Jaisson.

They say the right time to own GRANOLAS will be when global GDP growth is below 3%, which is what the bank expects for the next five years.

Perhaps surprisingly, in a world full of exchange-traded funds, Goldman hasn’t created a fund to trade under its moniker, meaning investors who want exposure to the theme would have to buy each stock individually.

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