The great "Granolas" companies

Three years later, the ranking of the largest capitalizations has changed somewhat. GlaxoSmithKline, Sanofi and SAP have dropped out of the Top 10, while Hermès and Shell have entered. 
But the characteristics of these stocks remain the same: strong balance sheets, strong earnings growth that is not sensitive to the economic cycle and high dividend yields. Unlike the US, Europe is not dominated by technology. Instead, the luxury, healthcare and consumer sectors account for the lion's share of the Top 10. 
For the first time in history, a European company has seen its market capitalization exceed 400 billion euros: LVMH Moet Hennessy Louis Vuitton SE, whose operating profit reached 21 billion euros in 2022. The other GRANOLAS are not so far behind: the Danish pharmaceutical company Novo Nordisk A/S has reached a capitalization close to 350 billion euros, while the Dutch semiconductor equipment company ASML NV is worth 230 billion euros. Ten European companies now have a market capitalization of more than $200 billion, crossing the threshold of "megacapitalization. Ten years ago, there were only three.

As mentioned above, GRANOLAS have several common characteristics. First, strong sales growth, despite their large size.  LVMH's first-quarter sales rose 17% year-over-year on the back of rebounding Chinese demand, while cosmetics maker L'Oréal SA reported a 13% increase in like-for-like sales in the first quarter. Norwegian pharmaceutical company Novo Nordisk predicted 2023 sales would rise about 27%, while ASML expects sales growth of more than 25% this year.
Most revenues are generated outside Europe, and many of these companies have dominant positions in "niches": Novo Nordisk controls nearly a third of the global diabetes treatment market by value, and its Wegovy is the first new obesity drug in years. ASML is the only company capable of producing the extreme ultraviolet lithography machines needed to write tiny features on chips. 
A monopolistic or oligopolistic position and a demand that often exceeds supply allow GRANOLAS to pass on any cost increases to prices. This pricing power is particularly sought after by investors in the current context of inflationary pressure. The luxury and healthcare sectors are particularly well positioned to preserve their operating margins, which are very high (over 40% for Hermès and Novo Nordisk). These sectors are also relatively resilient during growth slowdowns and even economic recessions.      
GRANOLAS also offer relatively attractive dividends, with an average dividend yield of around 3%. These dividends should continue to grow over time, due to strong earnings growth, a strong balance sheet and a payout ratio of about 50%.