European equities with strong upward momentum currently underappreciated in the market
Top Undervalued European Stocks with Strong Momentum and High Dividends
In the ever-evolving world of finance, investors are always on the lookout for undervalued stocks that offer a blend of income and growth potential. As we move towards the midpoint of 2025, a number of European stocks have caught the eye of analysts, showcasing impressive performance and attractive dividend yields.
One such standout is the Italian bank, BPER Banca, which has seen a gain of 86.5 percent since the beginning of the year. With a P/E ratio of 5.3 and a dividend yield of 5.20 percent, BPER Banca presents an appealing opportunity for those seeking income and growth.
Another Italian bank, Banca Monte dei Paschi, has also performed well, with a gain of 69.10 percent and a P/E ratio of 2.6, as well as a high dividend of 4.75 percent.
The best performer among European stocks in the Stoxx Europe 600 index, however, is Siemens Energy, with a gain of 197.9 percent. Although it has a higher P/E ratio of 12.5, its impressive growth and dividend yield of 3.90 percent make it an attractive prospect.
In addition to these Italian stocks, there are undervalued stocks to be found outside of Italy in sectors such as banking and manufacturing. For instance, the Finnish company Cargotec has a performance of 58.6 percent this year and offers a P/E ratio of 12.5 and a dividend yield of 4.30 percent.
Among the undervalued European stocks, there are some notable names in the asset management sector. Amundi, trading at an 18% discount to its fair value, is a large-value company with a narrow economic moat and shows positive one-year price momentum (+18.79%). Partners Group, another asset management firm, is undervalued by about 18%, although with some recent negative price momentum.
Industrial goods and machinery sector also have undervalued stocks, such as Atlas Copco, which trades at a 12% discount to fair value and presents value backed by a wide moat.
The insurance and financial services sector is not left behind, with Zurich Insurance Group and Allianz offering strong dividend yields of around 4.42% and 4.51%, respectively.
In the energy and materials sector, Rubis, Holcim, and ERG offer high dividend yields and robust dividend ratings.
Lastly, ASML Holding and AstraZeneca are notable undervalued growth stocks with momentum in the semiconductor equipment manufacturing and healthcare sectors, respectively.
In summary, this list of undervalued European stocks offers a strategic starting point for investors seeking a blend of income and growth exposure across financial services, industrial goods, energy, and technology sectors. However, it's important to remember that some of these stocks may show recent negative one-month or three-month returns, reflecting short-term market volatility. Dividend yields vary, with higher yields found in energy and insurance sectors, while asset managers and industrial firms emphasize growth and undervaluation. Market conditions such as European Central Bank policy and international trade remain influential in momentum.
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[1] Source: Morningstar and other analytic fair value estimates [2] Source: Dividend stock screeners and market research reports [3] Source: Financial news outlets and stock analysis reports
In the pursuit of both income and growth opportunities, these undervalued European stocks in various sectors could be attractive for investing: Amundi, trading at an 18% discount to its fair value, is a large-value company with a narrow economic moat and positive one-year price momentum; Partners Group, an undervalued asset management firm by about 18%; Atlas Copco, trading at a 12% discount to fair value and offering value backed by a wide moat in the industrial goods and machinery sector; and Zurich Insurance Group and Allianz, both providing strong dividend yields in the insurance and financial services sector. For those seeking growth, ASML Holding and AstraZeneca, with momentum in the semiconductor equipment manufacturing and healthcare sectors, are notable undervalued growth stocks.
