The best European stocks to watch for the long term

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  • Morgan Stanley selected quality companies that have been persistent outperformers in the marketplace.
  • “Despite recent price movements, quality stocks also appear to be reasonably valued,” analysts at the bank added.
  • Names such as French cosmetics brand L’Oreal, Dutch chip company ASML and Swiss food and beverage giant Nestlé appear on Morgan’s list.

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Over the long term, “quality” stocks have been persistent market outperformers for decades, Morgan Stanley research has published.

“The last three years of underperformance are both a rare anomaly and a potential opportunity for investors to re-engage. Despite recent price movements, quality stocks also appear to be fairly valued, with average relative valuations for the MSCI Europe Quality Index below its 10-year average.

bank analysts.

Following this, Morgan Stanley drew up a list of 35 stocks to see great returns only in 2025.

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The ranking is headed by the French cosmetics company L’Oreal. According to the bank, the firm is “well positioned” to continue its outperformance relative to its peers, with an expected compound growth of 8% in earnings per share through 2026.

Further back appears the British manufacturer of alcoholic beverages Diageo, which was classified as a premium and high-quality firm.

The name of the Dutch chip maker ASML also comes up. Morgan analysts believe the company plays a “significant role” in driving the trend toward digitalization.

The bank also included Swiss food and beverage giant Nestlé, which has products distributed almost worldwide. Morgan said the brand has “strong market dominance”, which, coupled with its track record of “superior” execution and pricing power, is expected to support organic sales growth of around 5.5%. and 8% until 2026.

Lastly, he chose the French company TotalEnergies, in charge of manufacturing premium oils for automobiles. The firm enjoys strong shareholder support as it undergoes a “green energy” transformation.

We believe investors may prefer instead to turn back to higher quality, growth stocks after an unusually long period of underperformance and with the outlook for bond yields and interest rates now potentially returning to normal. low”, concluded Morgan Stanley