We continue to believe that equities are the place to be for those with the stomach and time horizon to ride out the current trade turbulence and navigate the headwinds that constantly blow both in the U.S. and around the world, asserts John Buckingham, money manager and editor of The Prudent Speculator.
ING Groep NV (ING), a Netherlands-based financial institution, operates as a pure bank with a European retail focus and maintains a global commercial banking business. Along with many other European banks, ING has experienced a challenging 12 months as the interest rate environment has not been supportive.
While Q2 financial results beat consensus analyst expectations on both the top and bottom line, shares moved down further as investors worried about management’s ability to contain costs.
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We think the selling was overdone as, unlike many European peers, ING should be able to pull levers to counterbalance deteriorating deposit margins thanks to its diversified business profile, good loan volume growth and improving lending spreads in most divisions.
We also like ING’s leadership in digital and mobile banking, its increasing presence in fintech and its solid capital levels, including a Basel Tier 1 ratio of 14.5%. Shares currently offer a net dividend yield of more than 5%, while they trade for just 7 times estimated earnings and below tangible book value.
Sanofi (SNY) is a global integrated health care company focused on Diabetes Solutions, Vaccines, Genzyme, Emerging Markets, Consumer Health Care, Animal Health and Other Innovative Products.
We saw SNY’s Q2 results as favorable, as they beat bottom-line consensus expectations by 5%. Total Q2 sales increased 4% versus the prior year as growth in vaccines and specialty drugs more than offset primary care drug declines.
We expect Sanofi will continue to benefit from a pipeline that is increasingly more focused on areas of unmet medical need, such as oncology and immunology. Shares trade at 13 times next 12-months adjusted earnings projections and carry a net dividend yield of 3.4%.
Siemens (SIEGY) is an engineering and manufacturing giant that specializes in electrification, automation and digitization. The company has nine business segments with more than a billion dollars in revenue and representation in some 190 countries.
SIEGY posted Q2 earnings per share of $0.71, $0.08 less than the consensus estimate, which prompted shares to drop by 6%. Siemens battled stronger-than-expected headwinds in the quarter, resulting in lower margins, while the Industrial segment had weak profits due to geopolitical and macroeconomic risks.
Siemens is no stranger to challenges, particularly of the geopolitical variety, and we think that the company’s long-term emphasis on renewable resources will carry the day. We like Siemens’ worldwide footprint, diversified business portfolio and strong emphasis on the digitization of infrastructure. The German ‘blue-chip’ yields close to 3%.
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