Stock Quotes in this Article: PT, STO, RGBPY, BAYRY, AIQUY

MILLBURN, N.J. (Stockpickr) -- There is no doubt that Europe is having its troubles. You can attribute this to a long list of problems that are evident across the pond. Here are several of those problems:

  • -- A central bank that continues to obsess on inflation rather than the dual mandate of the US Federal Reserve which concerns itself with both economic growth and inflation.
  • -- An economic confederation of many countries, called the European Union or EU that for centuries have battled; conquered; and, hated one another. Those cultural and nationalistic biases still exist despite the signing of the Maastricht http://www.eurotreaties.com/maastrichtec.pdf and subsequent Treaties.
  • -- Deep rooted socialism in many countries
  • -- A single currency for some but not all European Union members. This conflicts with the fact that each sovereign nation issues its own debt and has a different set of taxation laws and policies.
  • -- Commercial banks that are undercapitalized

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    Yet despite all of the above, there are many European companies that offer excellent investment opportunities. This Stockpickr article will offer up five European companies from five different nations which are worth consideration.

    Statoil (STO)

    Home Country: Norway

    Home Currency: Norwegian Krone (NOK)

    Market Cap: $74.9 billion

    P/E Ratio: 8.4

    Dividend Yield: 4.7%

    Statoil ASA is a global oil & gas drilling and exploration company. There are some interesting aspects to this company that allow it to stand out in Europe and within its sector. First is the fact that Norway is neither a member of the EU nor utilizes the Euro as its currency. This insulates that country and its companies from some EU problems.

    Second is that the country’s geographic location places it squarely in the areas where North Sea Brent oil is found. It is estimated that the Norwegian section of the North Sea contains a majority of the oil and natural gas reserves in the North Sea. North Sea Brent crude oil currently sells at about a $25 per barrel premium to the lighter West Texas Intermediate crude oil. Third, the company’s dividend of 4.7% per annum, which is only paid annually, exceeds the annual dividend yields of Exxon (XOM) 2.56%; Chevron (CVX) 3.2%; Conoco Philips (COP) 4.00%; and, BP (BP) 4.25%.

    Reckitt Bensicker (RBGPY)

    Home Country: United Kingdom

    Home Currency: Pound Sterling (GBP)

    Market Cap: $39.5 billion

    P/E Ratio:15.1

    Dividend Yield: 3.6%

    Reckitt Bensicker may not be a household name, especially in the U.S. However you might be quite familiar with many of its products. This nearly 200-year-old company sells products under brand names such as: Air Wick, Brasso, Clearasil, d-Con, Easy Off, French’s Mustard, Lysol and Woolite. Reckitt Bensicker is in many ways a British cousin to Clorox (CLX) which is currently being sought after by Carl Icahn.

    Can Reckitt Bensicker be a future acquisition target? Do not rule that possibility out. As a British company, Reckitt Bensicker is subject to monetary decisions made by the Exchequer of the UK and is denominated in pound sterling rather than the euro. If you are concerned about global economic conditions then this company as a purveyor of consumer staples offers a low risk investment in uncertain times.

    Bayer (BAYRY)

    Home Country: Germany

    Home Currency: Euro (EUR)

    Market Cap: $53.0 billion

    P/E Ratio: 22.8

    Dividend Yield: 3.1%

    When you think of Bayer the first thing that comes to mind is Bayer Aspirin. You would of course not be wrong but that brand only scratches the surface of what Bayer has to offer the world. The company operates three major divisions:

    • Healthcare – besides aspirin, the company produces a wide range of products including pharmaceuticals, consumer products, medical testing products and devices, and animal health products
    • Nutrition – a portfolio of agricultural and bio science products to help grow better crops and protect against pests
    • High Tech Materials – one of Bayer’s largest segments which produces chemicals, plastics and polymers

    Looking at Bayer, the company has a wide portfolio of products which are: stable, such as healthcare; high growth, such as agricultural; and cyclical such as the chemical business. While Germany is part of the EU and uses the euro as its currency, that country is the largest and best managed economy in the Eurozone.

    L’Air Liquide (AIQUY)

    Home Country: France

    Home Currency: Euro (EUR)

    Market Cap: $7.2 billion

    P/E Ratio: 18.7

    Dividend Yield: 2.5%

    L’Air Liquide is one of the world’s leading producers of gases and related products for industrial usage, health sciences and emission control. The company’s two leading competitors, Praxair (PX) with a $28 billion market capitalization and Air Products & Chemicals (APD) with a market capitalization of $16.5 billion, are both based in the U.S., giving Liquide a strong regional presence in Europe. The company is also growing in the developing economies.

    Furthermore L’Air Liquide has several growth drivers in energy, environmental control and health sciences which are less prone to the vagaries of European credit and economic problems than banking and consumer discretionary oriented companies. France is the second largest economy for countries that use the Euro as its currency.

    PORTUGAL TELECOM (PT)

    Home Country: Portugal

    Home Currency: Euro (EUR)

    Market Cap: $7.5 billion

    P/E Ratio: 9.0

    Dividend Yield: 21.6%

    Yes, Portugal is one of the PIIGS nations -- Portugal, Ireland, Italy, Greece and Spain. Even in those countries, there are stocks far less prone to the banking and governmental problems that plague those poorly fiscally managed nations.

    In times like this I always think of widows and orphan stocks. These are stocks in the telecom, utility, pharmaceutical and basic food stuffs businesses that always generate profits and pay healthy dividends in good and bad times.

    In the eurozone, Portugal Telecom fits that description. The company pays a very healthy dividend. However, the 2011 dividend per share of $1.868 was significantly higher than the 77 cents paid out in 2009 and 2010. Even at those old payout amounts, the stock would have a dividend yield worth calling home about. 

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    At the time of publication, author had no positions in stocks mentioned.

    -- Written by Scott Rothbort in Millburn, N.J.

     

    Scott Rothbort has over 25 years of experience in the financial services industry. He is the founder and president of LakeView Asset Management, a registered investment advisor specializing in customized separate account management for high net worth individuals. In addition, he is the founder of TheFinanceProfessor.com, an educational social networking site, and publisher of The LakeView Restaurant & Food Chain Report. Rothbort is also a professor of finance at Seton Hall University's Stillman School of Business.