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Gurus' Favorite Euro Stocks for Europe's Drop

December 03, 2013 | About:
Holly LaFon

Holly LaFon

273 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 (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 (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:

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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 (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 (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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