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Magnificent Seven vs GRANOLAS – what investors need to know, plus 3 share ideas

The Magnificent Seven in the US have dominated market headlines recently. But could Europe’s lesser-known heavyweights, the GRANOLAS, be worth a look too?
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Important information - This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

We take a closer look at the differences, how they stack up to their US counterparts and share our three standouts from the GRANOLAS.

This article isn’t personal advice. If you’re not sure an investment is right for you, seek advice. Investments and any income from them will rise and fall in value, so you could get back less than you invest. Past performance isn’t a guide to the future and ratios shouldn’t be looked at on their own.

Investing in an individual company isn’t right for everyone because if that company fails, you could lose your whole investment. If you cannot afford this, investing in a single company might not be right for you. You should make sure you understand the companies you’re investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio.

Magnificent Seven vs GRANOLAS – who are they?

The so-called Magnificent Seven are some of the biggest and best performing companies in the world – made up of Apple, Alphabet (Google’s parent company), Amazon, Meta, Microsoft, Nvidia and Tesla.

These US-based, tech-heavy companies are at the forefront of sectors like artificial intelligence (AI), electric vehicles, cloud computing, and digital services.

But Europe has its own class of stock market heavyweights.

GSK, Roche, ASML, Nestle, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, Sanofi and SAP are together referred to as the GRANOLAS.

These eleven companies are global leaders in sectors like pharmaceuticals, beauty and food.

Size and scale

Six of the Magnificent Seven companies are valued at over $1tn, with Tesla being the exception at $500bn. Together, they’re valued at an eye-watering total of around $14tn.

Between them, they make up around a third of the S&P 500’s total value (an index tracking 500 of the largest US companies). So, the US stock market’s performance is very heavily weighted to the performance of these seven companies.

In contrast, Europe’s GRANOLAS don’t pack the same punch. The most valuable company in Europe is pharmaceutical giant Novo Nordisk, valued at around $430bn.

The European market is also far smaller than the US. It’s valued at around $14.5tn, with the eleven GRANOLAS accounting for around 19%.

Currently, the Magnificent Seven have an average price-to-earnings (PE) ratio of 44.5 compared to the GRANOLAS’ 30.7. So, the Magnificent Seven are relatively more expensive, as the market puts higher expectations on these companies, demanding a higher rate of future growth.

How does the GRANOLAS’ performance stack up?

Since the start of 2021, both groups have performed well, and returns have moved broadly in line with each other.

But, the gap’s widened since the start of 2024. That’s largely thanks to NVIDIA which has benefited from the AI boom.

Another key point to note is that the returns of the Magnificent Seven have been much more volatile than the GRANOLAS over this period.

12-month returns to the end of March












Magnificent Seven






European Market






Past performance isn't a guide to future returns.
Source: Refinitiv Eikon, 12/04/2024 (European Market is represented by the STOXX Europe 600 Index).

What does all this mean for investors?

Given the dominance of the big US names, you can’t ignore the Magnificent Seven. This dominance is likely to persist, especially in the near-term due to their involvement in big growth drivers like AI and cloud computing.

But investors shouldn’t overlook the opportunities available in Europe. The GRANOLAS show you can find quality companies closer to home too, and at lower valuations on a PE basis.

The GRANOLAS can also offer diversification, given they’re spread across different geographies and sectors, which could help to smooth returns when held as part of a diversified portfolio.

Given these potential benefits of investing in Europe – here are three names we think are worth closer attention.


The only tech name out of the GRANOLAS is Netherlands-based ASML. It’s the global leader in lithography machines, a vital part of producing the microchips that power electronic devices.

ASML’s the sole producer of the most advanced type of lithography machine, called High-NA Extreme Ultraviolet (EUV) lithography. It took over 20 years to research, develop and commercialise the technology involved in EUV – which is now a very wide moat for any competitor to try and cross.

With the AI boom fuelling demand for the most powerful kind of chips, ASML finds itself essentially selling the picks and shovels in an AI gold rush. The group’s revenue and operating profit jumped around 30% and 39% respectively in 2023.

Longer-term trends like growing data volumes, increased demand for electric vehicles, and the energy transition underpin forecasts that the overall semiconductor market could more than double by 2030.

Given this outlook, ASML’s expecting a more than 100% uplift in its sales and to significantly expand its margins by the end of the decade, which we think looks achievable.

The company’s capacity to manufacture and deliver its machines is a potential constraint on growth. Ambitious plans to increase headcount and production capacity are underway, but the highly-qualified labour needed is in short supply and doesn’t come cheap. Thankfully, there’s plenty of cash on hand to help fund these efforts.

The market’s taken notice of ASML’s monopoly in the space though. At a lofty valuation of 42.6 times next year’s expected earnings, there’s serious pressure on ASML to meet market expectations. Potential investors should be aware that the valuation’s likely to be punished if the group fails to deliver.

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Given the number of pharmaceutical companies that make up the GRANOLAS, we’d be remiss not to dive into one.

GlaxoSmithKline (GSK) is a fully focused biopharmaceutical company. It’s been more than a year since it spun off its consumer health division, which included brands like Sensodyne toothpaste, Panadol painkillers and Centrum multi-vitamins into Haleon, and we’re impressed by the progress it’s making.

In 2023, revenue grew 14% to £30.1bn, excluding pandemic-related sales which now only make up a small amount of the total. There were also four major product approvals in the year and there’s potential for more clinical milestones in 2024. Although, there’s no guarantee of continued success.

Underlying operating profit rose by 12% to £8.8bn, helped by a growing contribution of royalty income. HIV medicines are a key area for the business. Newer treatments are now gaining traction, as generic competitors eat away at the pricing power of some of its legacy products.

Vaccines are proving to be a major growth driver too. The recently approved respiratory syncytial virus (RSV) vaccine, Arexvy, has made a good start following its commercial launch. There’s more market share to go for, but it faces some tough competition.

Strong cash flows and manageable debt levels help underpin a prospective dividend yield of 3.8%, although this isn’t guaranteed. This also supports selective acquisitions which are adding to the healthy research pipeline.

GSK’s valuation is much less demanding than its peers. In part, this might be due to questions over cancer links to its heartburn drug, Zantac. A key legal hearing is well underway, with markets expecting settlement to be the most likely outcome.

Overall for GSK, continued execution of the growth strategy and a strong clinical pipeline could reward investors willing to ride out any possible storms. Of course, there are no guarantees, and the ride could be bumpy.

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LVMH is Europe’s luxury powerhouse. It’s a conglomerate of high-quality names like Louis Vuitton, Christian Dior, Givenchy, and TAG Heuer to name a few. Simply put, it offers unparalleled breadth and scale in the luxury sector.

The group’s performance has been commendable in recent years, far outpacing the broader market. In 2023, revenue rose 13% on an organic basis to €86.2bn. All divisions recorded organic growth apart from Wines & Spirits.

A slowdown in one division is something to watch, but it’s not something we’re overly worried about. Especially in a company of LVMH’s size.

The largest division, Fashion & Leather goods, has continued to post robust growth figures. These kinds of items are status symbols, and the group’s mega-wealthy customer base tends to be undeterred by sky-high prices.

Being able to charge such prices for products means operating margins are healthy, currently floating in the mid-twenties. That helped LVMH to grow its profits from recurring operations by 8% to €22.8bn last year.

Group CEO, Bernard Arnault, has been at the helm for the better part of 40 years. He’s the largest shareholder and his family owns 48% of the shares, which probably explains the focus on long-term success.

On the flip side, this raises questions about succession plans. When the day comes for him to step down, there’s likely to be some short-term turbulence. And longer term, there’s no guarantee his replacement will have the same level of success.

The valuation’s broadly in line with its long-run average of around 23.3 times forward earnings. Compared to peers, that’s middle of the pack. To us, it suggests that not all of the group’s strengths are currently priced in, and could offer an attractive entry point. However, of course, there are no guarantees.

This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated, estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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Written by
Aarin Chiekrie
Aarin Chiekrie
Equity Analyst

Aarin is a member of the Equity Research team. Alongside our other analysts, he provides regular research and analysis on individual companies and wider sectors. Having a keen interest in global economics, he knows how macro-events can impact individual companies.

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Article history
Published: 17th April 2024