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Gurus' Favorite Euro Stocks for Europe's Drop

December 03, 2013 | About:
Holly LaFon

Holly LaFon

320 followers
Europe saw a steep market drop today. European stocks are down to three-week lows, with declines almost across the board, as 90% of the top 600 stocks are in negative territory, according to CNBC. Weak data precipitated the drop.

This follows mixed results in November. According to Hedge Fund Research Inc.:

“Broad-based US equity gains were led by Technology, Healthcare and small caps, offsetting weakness in Energy, REIT and commodity-sensitive exposures. European equities posted mixed performance, with gains in Germany, Sweden and the Netherlands offset by weakness in the UK, Italy & Russia. Asian equities were also mixed, with strong gains in Japan, China and Hong Kong offset by weakness in Australia, India & the Philippines.”

The European pullback may provide an attractive situation for investors searching for undervalued stocks outside the U.S. According to GuruFocus global coverage and the All-in-One Screener, these are the Europe-based stocks the most guru investors purchased in the most recent third quarter.

Transocean (NYSE:RIG)

Gurus who bought – 10

Largest guru shareholder – Carl Icahn with 21,477,900 shares, or 5.96% of shares outstanding

Largest third quarter increase – Joel Greenblatt, increasing 772.2% or 56,450 shares

Country: UK

Transocean is an offshore drilling company that finds and develops oil and natural gas reserves. It has a $19.96 billion market cap, with shares up almost 12% year to date to a Tuesday price around $49.83.

The company’s third quarter results, reported Nov. 6, included a revenue increase to $2.56 billion from $2.431 billion the previous year. It also posted net income of $546 million compared to a net loss of $381 million the previous year.

Carl Icahn reached an agreement with RIG on Nov. 11 that it would pay an additional dividend of $3 per share, a reduction in the number of board members and the inclusion of an employee of his company on the board.

Carl Icahn said in a statement, "I am pleased that the Board has agreed to add Vince Intrieri as a nominee, and to reduce the Board size to eleven and I am especially happy about the commitment to pursue a MLP, raise the dividend and increase margins by $800 million through cost cutting and increased efficiency. I believe that Transocean is now on the road to realize its great potential. We look forward to continued collaboration with the Board of Directors and management."

Vodafone (NASDAQ:VOD)

Gurus who bought – 10

Largest guru shareholder – John Paulson with 20 million shares, or 0.41% of shares outstanding

Largest third quarter increase – Jean-Marie Eveillard’s First Eagle with a 228,359% increase of 1,142,294 shares

Country: UK

Vodafone is a mobile communications company offering mobile, messaging, data and fixed line. Its market cap is $178.83 billion, and its shares have gained 46.5% year to date, to a price around $36.91 on Tuesday, a near 10-year high.

On Nov. 12, Vodafone reported its results for the six months ended Sept. 30, 2013. Its organic group revenue declined 3.2% to £22.03 billion, while reported profit grew 1.4% to £18.06 billion, from the previous year.

Vodafone’s long-term revenue and earnings history:

1386102805703.png

Vodafone has a PE of 264.2, near a 10-year high, and P/S ratio of 2.49, close to a five-year high. Its P/B is 1.6.

Elan Corp PLC (NYSE:ELN)

Gurus who bought – 7

Largest guru shareholder – Vanguard Health Care Fund with 3.81% of shares outstanding, or 19,470,300 shares

Largest third quarter increase – Mario Gabelli, buying 93,800 shares for a 168.1% increase

Country: Ireland

Biotechnology company Elan Corp focuses on neurodegenerative and autoimmune diseases. It has a $9.28 billion market cap, and its shares gained 76.5% year to date, selling for $18.02 each on Tuesday, near a five-year high.

For its third quarter, announced Oct. 24, it had $48.6 million in revenue, down from $306.6 million the previous year, and a net loss of $13.8 million, improved from a net loss of $229.9 million the previous year. The company also exited the quarter with $1.9 billion in cash and no debt.

On Nov. 18, Elan shareholders announced the approval of its acquisition of Perrigo Company, a global healthcare supplier that deals in over-the-counter and generic prescription drugs, and has a $14.63 billion market cap.

Elan’s 10-year revenue and earnings history:

1386103964175.png

Elan’s P/E is 3.9, P/B is 4.5 and P/S is 96.15, near a one-year high.

Frank’s International NV (NYSE:FI)

Gurus who bought – 8

Largest guru shareholder – PRIMECAP Management with 0.29% of outstanding shares or 444,400

Largest third quarter increase – PRIMECAP had the largest new buy, as listed above

Country: The Netherlands and Texas

Frank’s International supplies the oil and gas industry with engineered tubular services for both onshore and offshore projects. With a $3.73 billion market cap, its share price declined over 5% year to date, closing at $25.05 on Tuesday.

Frank’s International’s third quarter results were released on Nov. 12, with a 7.8% decline in revenue to $270.1 million, and net income of $40.81 million from $68.07 the previous year. Financial results were impacted by $2.4 million, the cost of its August recent initial public offering (IPO).

Frank’s has a P/E of 21.2, P/B of 7.1 and P/S of 3.6.

See more European stocks gurus purchased last quarter using the All-in-One Screener here. Become a GuruFocus global premium member here.


Rating: 4.1/5 (7 votes)

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