Investors looking for great quality companies with eye catching valuations have seen the pool of opportunities drastically diminish in the UK this year. With equity prices leaping ahead, particularly among small and mid cap stocks, buyers have been left scrabbling around for brief and infrequent price dips and the sometimes unpalatable option of loosening their investment rules. But it doesn’t have to be this way. Across Europe, markets have also risen this year but there still appears to be value and quality in abundance.
While drawing conclusions from index comparisons is perilous, the FTSE 350 has risen by around 14.8% this year (the FTSE 250 on its own is up by 23.5%) while the index of Europe’s largest listed companies, the FTSE Eurofirst 300 Ex-UK, has risen by 17.5%. News that European stocks have been stretching their legs in 2013 won’t come as a surprise to anyone watching Stockopedia’s Screen of Screens investing strategy. It works by tracking companies that have been qualifying for the highest number of our other GuruModel investment screens and has produced an index-busting 23.9% return over the past six months.
By its nature, the European SoS hunts down shares that have comparatively wide appeal across various investment disciplines like value, growth, quality and momentum. But with a small tweak it’s possible to focus on which of them specifically offer potentially appealing value and quality characteristics - and there is no shortage. By ‘forking’ the screen and introducing a Crossover Quality+Value (QV) Rank, it’s clear that the current crop of SoS stocks boast some of the highest QV ranks in Europe - just take a look at the screen. As always, it’s essential to follow up this sort of screening with your own research.
Top ranking stocks
Topping that list on a Quality and Value basis is Romanian oil and gas giant OMV Petrom (SNP), a £4.9bn group involved in everything from upstream exploration and production to downstream refining and marketing. Its combined QV ranking - which integrates a range of metrics into a single composite ranking score - put it in the top 1% of the market. It already qualifies for seven long-only investing strategies including a handful of dividend screens that give a nod to its impressive forward yield of 6.6%. Many oil and gas companies have seemingly been…
