Investors should look for opportunities in the unloved region of Europe, according to fund manager Sean Peche, who said the region has some “very attractively priced” companies.
Europe has fallen out of favor, Ranmore Fund Management's Peche told CNBC's Silvia Amaro, and Donald Trump's United States has caught investors' attention electoral victory.
“At the same time that Europe was struggling, there was euphoria about Trump,” Peche said. “So everyone was rushing to invest in the U.S.… But running to the newest, flashiest stuff is usually not a good way to make money.”
Peche downplayed investors' concerns about France, which – together with Germany — has been in political turmoil in recent weeks. French President Emmanuel Macron has appointed Francois Bayrou as his new prime minister last week after overthrow of Michel Barnier's government.
Macron called early elections in June that failed without a clear majority, triggering months of political chaos and deadlock.
But Peche remains unmoved. “Maybe the euro will fall apart, but probably not. And the companies we own are very attractively priced,” he added.
These shares include a French bank BNP Paribas – which, he noted, has been steadily increasing its book value (or net worth) – and a Dutch investment bank ABN Amrowith a dividend yield of 10.2%. “It's very attractive,” Peche said.
Looking at the UK, the fund manager found “attractive” stocks such as Related British Food Productswhich owns retail giant Primark, has also been ignored by investors.
“Primark is doing really well. It's a cool, diversified business with (a) great management team. “I won't wake up tomorrow and say the management team did something stupid,” he said.
“They are attractively priced. We get a nice dividend. They are buying back shares, but it is unfavorable because it is a mid-cap company and is listed on the UK stock exchange.”
Eyes on the toy maker
Peche is bullish on mid-cap companies on the other side of the Atlantic, such as the US toy giant Mattel.
With household brands such as Barbie and Hot Wheels, the toy maker has expanded beyond its core products.
Mattel's management team has “turned the business around so that debt is now manageable and the company is up and running $1 billion buyout– Peche said.
The premiere of a new Barbie animated series on Netflix in November and a second documentary series in September chronicling Mattel's rise give the toy maker – currently valued at about $6.2 billion – “growth potential,” Peche said.
Mattel has seen a surge in purchases of Barbie toys following the loud bang the success of the movie “Barbie”. in 2023, the most profitable film that year, which grossed over $1.4 billion worldwide. It also produced toys for hit films such as “Moana” and “Wicked.” the latter hit a snag and was forced to recall its line of character dolls after a misprint on packaging containing a link to a pornographic website.
In October, both Mattel and the competition Hasbro lowered their year-end forecasts as toy sales declined in the third quarter. Mattel said it expects sales for the final three months of the year to be “comparable to slightly down” from its previous guidance update.
— CNBC's Kristian Burt contributed to this report.