The World Economic Forum is about to start, with politicians and business leaders descending on the resort of Davos in the Swiss Alps.
The meeting looks set to be exceptionally busy, as fears of the return of a global recession abound after the worst start to a new year ever for many stock markets around the world.
Besides the market turmoil, those present will probably discuss big themes such as how to tackle unemployment, the rise of geopolitical tensions, the challenges that increased automation and artificial intelligence pose to the workforce, the commodities price crash and climate change.
Switzerland, itself, is unlikely to rank high in the discussions this year, but this is a good opportunity for investors with an eye on Europe to take a look at Swiss stocks. Here are three stocks that are worth putting on your watchlist:
- Nestlé (NSRGY) has been nicknamed "the sleeping giant" by analysts because of the slow pace at which it seems to progress, at times. However, the world's biggest food and beverages conglomerate has been anything but sleepy lately, as it keeps trying to find new ways to sell its products. It just announced a partnership with China's Alibaba (BABA) to boost online sales in that huge market, sending its shares 1.6% higher on the Swiss stock exchange. The company generates half of its revenue in North and South America, and around a quarter in Europe and Asia. It currently trades on a price-to-earnings ratio of 13.5x and has a dividend yield of 3.14%, with a payout ratio of 48.08%. The company will announce full-year 2015 results on Feb. 18. This could be a weak spot, as earnings momentum might wane on the back of global deflation worries. However, this maker of staple consumer goods should do well as a defensive stock in an environment in which the world growth outlook continues to be cut, like the International Monetary Fund (IMF) did today.
- Novartis (NVS) is a drug maker that analysts love to recommend as a "buy," right now. Looking at the Swiss stock exchange data, there are 14 "buy" recommendations and seven "hold," vs. just one "sell." The United States makes up more than 30% of its sales, and that is the perfect scenario for U.S. investors, who can benefit from exposure to the strong domestic market for drugs, while at the same time diversifying by investing in a foreign-based stock. Japan is its second-largest market, followed by Germany. All three markets offer good growth prospects for health care stocks, as populations age. Novartis recently announced that the FDA had approved its arthritis drug, Cosentyx, for two new indications, ankylosing spondylitis and psoriatic arthritis. The shares trade on a PE of 17x and it has a dividend yield of 3.23%. The company is due to report full-year results on Jan.27.
- Roche Holding (RHHBY) is even better loved by analysts than its peer, above. It has 20 "buy" recommendations, one "hold" and no "sell," according to data from the Swiss stock exchange. A A recent Bloomberg article, this is because the company, which is the world's biggest anti-cancer drugs maker, won approval in the U.S. for two new drugs in the last quarter of 2015. It also expects approval this year for ocrelizumab, a multiple sclerosis treatment. Roche will report full-year earnings on Jan. 28. Last October, the company posted a 6% jump in sales in the third quarter due to new cancer treatments and raised its full-year forecast, saying its sales will climb in the mid-single digit percentage range. Chief Executive Officer Severin Schwan said, at the time in the earnings call, that the company's innovations "will continue to be rewarded." If there's anything that could hold investors back, it is the fact that the shares themselves are expensive, trading on a PE of 18.6x, which leaves little room for disappointment. However, with a dividend yield of more than 3%, this innovative company in a high-growth sector remains attractive, especially for long-term investors.