Rumor Roundup: Crazy Day in Europe

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(Article by Becca Lipman. List compiled by Eben Esterhuizen, CFA. EPS data sourced from Yahoo! Finance.)

Tuesday bore witness to the unforgiving power of the rumor mill. Whispers of big announcements on Greece and French banks set the European markets on a roller coaster capable of leaving even the most hardened investors feeling dizzy.

It all happened before 8 AM EST. Here's how the markets played out:

1. The Wall Street Journal released an Op-Ed on French Banks. The gist of it being that French Banks were barred from borrowing U.S money market funds. According to WSJ's anonymous source, without access to the dollar "we're creating a market in euros. This is a first. . . . We hope it will work, otherwise the downward spiral will be hell. We will no longer be trusted at all and no one will lend to us anymore."

2. This report, as one could imagine, was followed by temporary panic and a rush of heavy selling.

3. People were so upset that French bank BNP Paribas vehemently issued a denial, assuring investors that they could still borrow in dollars. Selling subsided.

4. A report then came out that German Chancellor Angela Merkel and French President Nicolas Sarkozy plan to make a joint announcement  regarding Greece. According to Business Insider, "Presumably it will just be something about providing "support" for Greece, but anything's better than throwing in the towel."

5. Markets soared in anticipation. Business Insider reported "markets seem to think something big might happen -- all the big European markets are rallying, making up early morning losses."

6. French Spokesman Franck Louvrier announced there will be no big announcement after all. Sarkozy might make a minor announcement later in the day, but hinted it would be nothing too notable.

7. Markets plunged.

8. Markets recovered. BNP Paribas, which took the brunt of the French borrowing rumor, finished the day up 7.2% at €28.00.

Europe's rumor mill clearly has the markets in overdrive. So how will this European crisis play out? And more importantly, how can you protect yourself from Europe's trouble?

UBS's US Equity Strategy team put together a list of 30 stocks that should do relatively well if Europe deteriorates further.

Specifically, these stocks tend to outperform when credit default swaps rise in the European periphery.

From this list of 30 stocks, we looked for companies that have proven themselves to be more profitable than their competitors over the last 12 months.

To further refine the quality of the list, we focused on companies that have seen an increase in their earnings projections over the last 30 days.

These companies have proven themselves to be resilient to the troubles in Europe, and analysts expect these companies to continue to be profitable. Do any of these stocks interest you?

Analyze These Ideas (Tools Will Open In A New Window)

1. Access a thorough description of all companies mentioned
2. Compare analyst ratings for all stocks mentioned below
3. Visualize annual returns for all stocks mentioned

1. Abbott Laboratories (ABT): Engages in the discovery, development, manufacture, and sale of health care products worldwide. TTM gross margin at 68.13% vs. industry average at 67.38%. TTM operating margin at 22.75% vs. industry average at 14.23%. TTM pretax margin at 14.97% vs. industry average at 9.39%. The EPS estimate for the company's current year increased from 4.63 to 4.64 over the last 30 days, an increase of 0.22%. This increase came during a time when the stock price changed by -0.38% (from 49.91 to 49.72 over the last 30 days).

2. DaVita, Inc. (DVA): Provides kidney dialysis services in the United States. TTM gross margin at 31.06% vs. industry average at 20.97%. TTM operating margin at 15.27% vs. industry average at 8.52%. TTM pretax margin at 10.81% vs. industry average at 7.01%. The EPS estimate for the company's current year increased from 4.72 to 4.82 over the last 30 days, an increase of 2.12%. This increase came during a time when the stock price changed by -5.63% (from 74.66 to 70.46 over the last 30 days).

3. Unitedhealth Group, Inc. (UNH): Provides healthcare services in the United States. TTM gross margin at 24.76% vs. industry average at 20.97%. TTM operating margin at 8.61% vs. industry average at 8.43%. TTM pretax margin at 7.92% vs. industry average at 6.91%. The EPS estimate for the company's current year increased from 4.35 to 4.37 over the last 30 days, an increase of 0.46%. This increase came during a time when the stock price changed by -0.87% (from 45.94 to 45.54 over the last 30 days).

4. Duke Energy Corporation (DUK): Operates as an energy company in the Americas. TTM gross margin at 34.78% vs. industry average at 27.9%. TTM operating margin at 22.55% vs. industry average at 19.31%. TTM pretax margin at 20.7% vs. industry average at 14.76%. The EPS estimate for the company's current year increased from 1.37 to 1.38 over the last 30 days, an increase of 0.73%. This increase came during a time when the stock price changed by 0.71% (from 18.4 to 18.53 over the last 30 days).



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Investing Ideas , Stocks

Referenced Stocks: ABT , DUK , DVA , UNH

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