2 European Stocks I like More Than Their US Rivals

American investors seeking to diversify their portfolios and potentially achieve better value and perhaps less volatility may want to consider exploring the European markets. Indeed, it’s fine to have a home-country bias with your portfolio, but diversifying internationally, I believe, could allow you to swing at more pitches and improve your chance of hitting a grand slam of sorts. In any case, there are plenty of relative bargains to be had on the European market. And in this piece, we’ll go over two stocks that I like much better than their U.S. counterparts, especially at this juncture.

LVMH Moët Hennessy

There’s nothing quite like the French luxury brands. LVMH Moët Hennessy (LVMUY) is arguably one of the most premier plays in the global luxury brand market. During pandemic lockdowns, shares of the firm behind such brands as Louis Vuitton, Dior, Fendi, Tiffany, and retailer Sephora skyrocketed.

And while it’s been a rather turbulent ride since then, with shares now in a brutal bear market, down around 42% from all-time highs, I do see opportunity for investors seeking incredibly wide economic moats to punch their ticket into the name while the luxury consumer (and LVMH stock) is in a bit of a rough spot. Indeed, sales have been lackluster of late, with first quarter numbers falling short of even the most conservative of estimates.

With the slowdown in China and macro headwinds weighing heavily on aspirational consumers, it’s no mystery as to why LVMH is stuck in a bear market. Still, it’s not just the state of the world economy that’s to blame for LMVH stock’s downfall. The company has faced considerable competition for the high-end consumer, with fellow French luxury rival Hermès giving LVMH a good run for its money.

While there’s no telling when the slowdown in luxury goods will end, I do think that LVMH is a European name worth buying into before the next inevitable industry upswing. The stock trades at 19.5 times trailing price-to-earnings (P/E), making it a relative bargain given the caliber of brands underneath the hood.

ASML

ASML (NASDAQ:ASML) is another European firm that’s worth buying as an American investor. Seeing as ASML is pretty much the only big maker of extreme ultraviolet (EUV) lithography machines, a piece of equipment that’s necessary for semiconductor manufacturing, there really is no direct U.S. comparable for the firm. As the AI boom prospers, demand for AI chips and the machines needed to make them possible are bound to rise over the long haul. In any case, ASML shares are in a bit of a tough spot, now down over 25% from last year’s all-time highs. With a few analysts turning their backs on the stock in recent months, some investors may be a tad concerned.

However, I’d be inclined to buy on weakness, even though various big-name analysts have the right to be cautious over the potential for semi firms to trim into the spending going into the second half. While the business of semi equipment will always be cyclical, I do think that it’s wise to be a buyer of the dips and a trimmer after sudden surges.

Now that the Dutch firm is in a rut, I think it’s time to start doing some buying. The stock trades at 28.2 times forward P/E, which is a fair price to pay for a semiconductor equipment maker that’s a lone player in the EUV scene. And while ASML faces stiff tariff risks, I do think that U.S. buyers will have no other option but to deal with that hit to the chin. After all, ASML is the only EUV equipment maker in town!

Add the growing 1.1%-yielding dividend into the equation, and ASML stands out as one of the better ways to profit from a multi-year AI infrastructure boom. 

The post 2 European Stocks I like More Than Their US Rivals appeared first on 24/7 Wall St..