Key Points
- The Euro Stoxx 50 index is up 8.2% through June 30, nearly matching the S&P 500's 9.3% gain amid several European tailwinds.
- ArcelorMittal, Arm Holdings, and Novartis are three Euro Stoxx 50 components that have each delivered index-beating returns over the past 12 months.
- Analysts project earnings growth of over 49%, approximately 77%, and around 11% for ArcelorMittal, Arm Holdings, and Novartis, respectively, over the next 12 months.
- Special Report: Three oil giants buried the same discovery for 50 years
The first half of the year is over, and it may surprise some investors that European stocks are nearly at parity with U.S. stocks. The tale of the tape as of June 30 tells the story:
The S&P 500 is up about 9.3%. It’s a solid number even if it’s not a record. However, the Euro Stoxx 50 index is up 8.2% this year. This continues a bullish trend in the index that started in October 2022.
There have been several tailwinds for European stocks. These include a weaker dollar relative to the Euro and other European currencies, a valuation re-rating, increased defense spending in the European Union that is flowing into industrials, materials, and defense-adjacent names, broader sector diversification, and a more hawkish interest rate policy.
How to Invest in European Stocks
It's fair to say that investors would be cautious about European stocks because the growth isn’t based on fundamental performance. Multiple expansion and currency dynamics aren’t sustainable in the long term.
But the same can be said for the SPDR S&P 500 ETF Trust (NYSEARCA: SPY), which is a good proxy for the S&P 500. In fact, "SPY and chill" is a good way to invest as part of a long-term strategy.
For the Euro Stoxx 50 index, the SPDR Euro Stoxx 50 ETF (NYSEARCA: FEZ) is a nice proxy. However, investors may find they can do better by investing in some of the individual components within the index. Here are three names that have produced index-beating returns in the last 12 months.
ArcelorMittal Rides Europe's Industrial and Steel Revival
The first stock on this list is headquartered in the Netherlands. AcelorMittal (NYSE: MT) is one of the world’s largest producers of steel and operates an integrated value chain spanning raw material extraction, steelmaking, processing, and distribution.
Like any steelmaker, AcelorMittal is sensitive to fluctuating steel prices. However, the company has delivered results that highlight its stability in a volatile, competitive market.
MT is up more than 90% in the past 12 months and is trading within 2% of its consensus price target as of June 30. But that growth hasn’t come in a linear fashion. The stock dropped approximately 28% from late February through late March. Since then, the stock was boosted by the company’s Q1 earnings and the announcement of a share buyback program.
A more recent pullback of approximately 17% from its 52-week high leaves room for investors to get involved with a company that’s expected to grow earnings over 49% in the next 12 months. Investors will find out more when the company reports Q2 2026 earnings, scheduled for July 30.
Arm Holdings Remains a Core AI Infrastructure Growth Stock
ARM Holdings (NYSE: ARM) is one of the leading names in the AI infrastructure space. The England-based semiconductor IP company doesn’t manufacture chips. Rather, it licenses its architecture and instruction set to other companies, who then design and produce their own chips based on Arm's technology.
Like all the names in this space, ARM has been subject to volatile price swings. The stock is up over 220% in 2026, but has been subject to two drops of nearly 25% from June 4 through June 30.
Much of that is due to the general volatility in the chip sector, which could continue. However, analysts still predict earnings growth of approximately 77% in the next 12 months. That’s likely to be the catalyst that drives further gains. It may also be enough for investors to continue overlooking the stock’s lofty valuation of over 300x forward earnings.
Investors should expect more volatility as the AI infrastructure trade continues to shake out. But as long as chip demand remains elevated, ARM remains an essential name for investors looking to find profits.
Novartis Offers Defensive Growth Through Innovation and Dividends
Biopharma stocks may offer significant upside for the rest of 2026 and beyond. Among European stocks, Novartis (NYSE: NVS) is a name to watch. The company is based in Switzerland and has a prolific catalog of currently available products as well as a deep pipeline in areas such as oncology and gene therapy.
The company also faces threats from biosimilar (generic) products and its own research & development (R&D) spending, which is significant. Despite that spending, the company still expects to have earnings growth of around 11% in the next 12 months.
NVS is up about 14% in 2026 and is about 8% below its consensus price target of $141.20. The long-term story will require new revenue streams to offset its R&D spend, but it may not be time to fade the stock just yet.
Read this article online ›
The best investment opportunities don't wait. Get our research and stock ideas delivered straight to your smartphone—so you never miss a market-moving opportunity. Our text alerts ensure you see timely stock ideas and professional research reports instantly, whether you're in a meeting, commuting, or away from your desk.
Get Text Alerts from American Market News (free)
