ANNE ASHWORTH looks at investment opportunities in the UK and Europe

Looking for a new strategy to give your investments a crunchy boost? The answer may be found in two favorite breakfast cereals.

The “Magnificent Seven” tech stocks dominate the headlines, but professionals have quietly piled into the “Granolas” – 11 companies from the UK and continental Europe.

They are composed of GSK, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L’Oreal, LVMH, AstraZeneca, SAP and Sanofi.

This list of companies compiled earlier this year by US investment bank Goldman Sachs actually spells “Grannnollass”.

But let’s not be picky. As Sharon Bell, the bank’s strategist, says, these groups have “good growth, extremely good balance sheets and offer attractive dividends.”

They are multinationals that are not dependent on their national economies, but that will also benefit from lower interest rates in their home countries.

The granola cereal combines honey, maple syrup, nuts, oats and seeds. Honey and nuts are also some of the ingredients in Nestlé Cheerios cereal, the name given to a group of small European companies that are also “culturally diverse” – i.e. multinational companies.

The new acronym, coined by Artemis Chief Investment Officer Paras Anand, is based on an analysis that identifies companies with the most attractive fundamentals at the best prices.

The companies in question are: Coface, H Lundbeck, Evonik, Eramet, Repsol, Indra Sistemas, OTP Bank and SAF Holland.

Breakfast cereals of any kind may not be the best choice to start your day. However, a combination of Granolas and Cheerios will allow you to access a variety of sectors.

But diversification should limit your risk.

PHARMACEUTICAL PRODUCTS

Rising global spending on healthcare is good news for companies, although the sector still carries risks because drug development is expensive and has a high failure rate.

But this challenge should inspire even more innovation, meaning pharmaceutical groups represent an exciting bet.

Among the Granolas are British giants: AstraZeneca, the £216bn group that has 13 major drugs such as the chemotherapy treatment Enhertu.

Its shares may have risen 590 percent since Chief Executive Pascal Soriot took over in 2012. But analysts still rate it a “buy.”

Analysts are also optimistic about the outlook for £64.9bn GSK, formerly GlaxoSmithKline, whose best-selling products include vaccines and HIV drugs.

Among the Granolas are also two Swiss pharmaceutical companies.

Shares in Novartis, which makes the cardiovascular drug Entresto, have risen 18% this year to 100 Swiss francs (£89.28). The breast cancer drug Herceptin is a Roche product, but the company is about to enter the booming area of ​​obesity treatments. Its shares have risen 16% since January to 283 Swiss francs (£252.69).

For the moment, Denmark’s Novo Nordisk dominates the weight-loss market with its injectables Ozempic and Wegovy. It now faces increased competition from Eli Lilly’s obesity blockbuster Mounjaro. But its shares, trading at 912 kroner (£65.96), remain rated “buy”.

H Lundbeck is a much less famous Danish company, but it has earned its place among the Cheerios for its strengths in treating neurological and psychiatric disorders.

Since the start of the year, the shares have risen 40 percent to 46.28 krona (£3.35), and one analyst estimates they could reach 55 krona (£3.98).

Sanofi, the leading French pharmaceutical company, is best known for the asthma and eczema treatment Dupixent and is the world’s largest vaccine maker. Most analysts rate its shares, currently at €100.34 (£85), as a “buy”.

TECHNOLOGY

Dutch chipmaker ASML is considered the “outstanding AI winner” in Europe, with its shares up more than 1,000 percent compared to a decade ago.

Granola shares were caught up in the fleeting fall in tech stocks this month. But analysts say this autumn is an opportunity to buy the stock, which is trading at €818.80 (£693.64). The average target price is €1,068 (£904.75).

Gerrit Smith, equity fund manager at Stonehage Fleming Global Best Ideas, says ASML is poised to use the momentum to reverse the decline in chip manufacturing in the West. “From a global geopolitical perspective, this situation needs to be addressed. Fortunately, the US government is providing $280bn (£212bn) to create more capacity,” he says.

Shares in German software giant SAP have risen 40% this year to €195.62 (£165.81). Analysts at Barclays have raised their target price to €230 (£194.84).

Indra Sistemas, a Spanish group, provides IT services to the air traffic management, defense and transportation industries.

Major shareholders include Spain’s sovereign wealth fund and US bank JP Morgan, two reasons it has joined Cheerios. The shares, now worth €16.71 (£14.16), are expected to reach €23 (£19.48), with some analysts predicting €29 (£24.57).

BEAUTY, FOOD AND LUXURY

Chinese consumers’ reluctance to spend big on beauty products and handbags has hit Granola’s stocks: L’Oreal, the world’s largest cosmetics conglomerate, and LVMH, the luxury goods giant.

As a result, L’Oreal shares have fallen 12 percent to 394.40 euros (£334.30) since January, while LVMH shares are down 7 percent to 681.1 euros (£577.30).

But analysts remain confident that the popularity of LVMH accessories and L’Oreal lipsticks will return.

Reasons for optimism include sales growth at Sephora, LVMH’s chain of beauty boutiques, and L’Oreal’s acquisition of Galderma.

Demand for the company’s “neuromodulatory injectables” (aka Botox) remains high.

Nestlé shares are down 8% this year at 89.54 Swiss francs (£79.88). The granola group’s 2,000 brands include Kitkats, Smarties, Purina pet food and Nesquik, but consumers are opting for cheaper brands.

Analysts rate the stock as “hold” but are still targeting a price of 100 Swiss francs and expect new boss Laurent Freixe to reverse the slide.

FINANCIAL SERVICES

Banks and other financial companies don’t appear in Granola, but they are a key element of Cheerios.

France’s Coface is one of the world’s largest credit insurers. Its shares have risen 23% this year to €14.57 (£12.35), but some analysts predict they could rise to €17 (£14.40).

OTP Bank is listed in Hungary, but is one of the fastest growing banks in Central and Eastern Europe. Analysts are targeting 21,240.69 forints (£45.74), up from the current 17,695.00 forints (£38.10).

AUTOMOTIVE, CHEMICAL, OIL AND MINING

French mining company Eramet specialises in nickel, which is essential for the manufacture of electric vehicles.

Manganese, another specialty, is less in demand due to falling steel sales in China.

The shares are trading at €72 (£61.3). Analysts are optimistic and rate Eramet a “buy” with an average target price of €152 (£128.77).

Evonik produces methionine, a component of animal feed products; the German company is also a major sponsor of the Borussia Dortmund football club.

Analysts have set an average target of 22 euros (18.64 pounds) for the shares, which now stand at 19.63 euros (16.63 pounds).

Spanish oil and gas group Repsol has drilling, exploration and extraction activities around the world, but is also exploring low-carbon energy sources.

In light of this, Paras Anand believes that this is a “very attractive valuation” of €12 (£10.17). The average target price is €17 (£14.40).

Anand also says that shares in German automotive supplier SAF-Holland represent an “attractive valuation”.

The price has risen 18 per cent so far this year to €17.90 (£15.16), but analysts estimate it is on the verge of hitting €25 (£21.18).