NEW YORK (TheStreet) -- European stocks including Aegon N.V. (AEG), Veolia Environment S.A. (VE) and ArcelorMittal (MT) present opportunities for long-term investors because of the continued economic problems of the continent.
In an interview in Barron's, Carl Weinberg, chief economist of High Frequency Economics, described Europe as being in a recession. For investors, those are the conditions that are ideal for buying individual stocks to profit over the long term.
Legendary investors have mastered this form of "buying low."
During The Great Depression, Sir John Templeton, deemed "arguably the greatest stock picker of the century" by Money magazine in 1999, bought 100 shares of each company listed on the New York Stock Exchange that was selling for less than $1. When the United States economy recovered, he did very well. He was also one of the first to invest in Japanese companies in the 1960s.
Opportunities like those now exist in Europe.Like many financial services companies, Holland's Aegon N.V. has recovered from its lows of the Great Recession. But it is still undervalued compared to others in its sector. Aegon is selling at a price-to-book ratio of 0.51 and a price-to-sales ratio of 0.28. Lincoln National (LNC), another insurance company with a comparable market cap and price-to-earnings ratio, has a price-to-book ratio of 1 and a price-to-sales ratio of 1.13. It is much the same story with Veolia Environment S.A., a French waste management company. As with Aegon, it is selling at a deep discount to both its sales (0.24) and book (0.74) value. Waste Management (WM) has a price-to-sales ratio of 1.54 and a price-to-book ratio of 3.20. The analyst community projects earnings-per-share growth of over almost 55% for the next five years for Veolia Environment. For Waste Management, earnings-per-share growth over the next half decade is estimated to be only 3.10%.
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