Under the Radar: Hidden Value Across the Atlantic – 3 Stocks to Watch

Here is what they are not talking about on CNBC right now.

The instant experts of the Internet have no interest in the topic as it does not fit their current narrative.

European stocks remain cheap on both an absolute basis and when compared to the United States.

The European economy is not recovering as fast as the United States but is recovering.

In its mid-year outlook analysts at Goldman Sachs (Ticker: GS) suggested that given all the trade turmoil European investors have taken their ball and gone home. The nalsyst noted that " The trend of investors, particularly European investors, reallocating their assets towards Europe is partly being driven by concerns surrounding high US valuations, market concentration, and doubts about continued US economic exceptionalism. This has been reflected in increased fund flows into European stocks year-to-date, coupled with the relatively strong performance of European stock markets."

It is not an inconsiderable sum that Eurozone investors have to spend.

JP Morgan reported in their recent outlook piece that "The backdrop for the European consumer is also improving. Real wages continue to rise, labor markets broadly remain firm, and falling interest rates might finally encourage the region to deploy some of the sizeable savings that were accumulated during the Covid pandemic."

When asked for his view on European stocks Morningstar Analyst Michael Fields said " So overall I would say it's pretty mixed but tilting towards positive, Christopher. On the one hand, you have markets in Europe hitting all-time highs at the moment, which is a bullish sign for markets generally. But also there's the question of where valuations are behind that. Thankfully, we still see some upside to European markets. We think equities in Europe are trading at around a 5% discount, slightly more in the UK. So at least that gives us some headroom to grow in the second half, if indeed the outlook is positive, if the earnings season comes through for Europe as well. There is still a little bit of room for growth, which is good to hear."

As you can clearly see I have not been just attempting to amuse myself when I have been banging on  the table and yelling at you to buy European stocks for the past year or so.

Here are three high quality Europen stocks with pristine fundamentals that should be leaders of the next leg higher:

ABB Ltd (Ticker: ABBNY): Electrification, Automation, and a Robotics Spin-Off on the Horizon
ABB Ltd. is a Swiss–Swedish multinational industrial technology company with roots going back more than 130 years. The business is focused on four core divisions: Electrification, Motion, Process Automation, and Robotics & Discrete Automation. These are not glamorous sectors, but they are absolutely critical to modern infrastructure, manufacturing, and energy transition.

The Electrification segment provides products and systems for everything from low- and medium-voltage distribution to electric vehicle charging infrastructure and smart building solutions. Motion includes electric motors and drives, while Process Automation delivers control systems, analytics, and field instrumentation to industries like oil and gas, mining, and chemicals. The Robotics division—soon to be spun off—sells industrial and collaborative robots that work alongside humans in factories worldwide.

ABB operates in more than 100 countries with over 100,000 employees. It generated over $32 billion in revenue in 2024. Recent earnings have shown strong order intake and organic growth in the high single digits. The company is benefiting from long-cycle investments in electrification and grid upgrades, particularly in Europe and Asia. It has also taken steps to improve margins through divestitures and automation-led efficiencies.

The upcoming spin-off of its robotics division is a value-unlocking move. Robotics accounted for roughly $4 billion in revenue last year and has strong demand from automotive, electronics, and logistics customers. ABB is one of the few firms globally with a full-stack offering across robotics hardware and software, and the market is finally starting to appreciate that. The spin-off could attract a different investor base and make ABB's remaining operations more focused and capital-efficient.

Zurich Insurance Group (Ticker: ZURVY): A Conservatively Run, Global Underwriting Powerhouse
Zurich Insurance is the kind of stock you buy for peace of mind and income. It is Switzerland's largest insurer and one of the most respected names in global insurance, with a history stretching back to 1872. The company operates in more than 200 countries and territories, with a diversified portfolio that includes property and casualty (P&C), life insurance, and reinsurance.

The P&C division provides everything from home and auto insurance for individuals to large-scale commercial and specialty risk products for corporate clients. The life insurance unit offers term and whole life, annuities, and savings products across Europe, Asia, and Latin America. Through its Farmers Group subsidiary in the U.S., Zurich earns steady fee income while Farmers Insurance handles underwriting. This structure gives Zurich stable cash flows without the same underwriting risk burden.

Zurich has earned a reputation for underwriting discipline and conservative reserve practices. Its combined ratio in the P&C business—an indicator of underwriting profitability—has remained below 95%, even during volatile periods. That means Zurich is not only earning on its investment portfolio, but it is also turning a profit on its core insurance operations.

Financially, the company generated nearly $6 billion in net income last year on more than $68 billion in gross premiums and policy fees. Return on equity has consistently been above 20%, and the balance sheet is rock solid, with a Solvency II ratio of over 200%. It has increased its dividend in Swiss francs for several years in a row, and the current yield is in the 4% to 5% range.

Zurich trades at around 17 times earnings and only a fraction of book value—less than 0.2x—which is almost unheard of for a company with this kind of track record. That reflects some investor caution around catastrophe risk and global insurance cycles, but for those willing to look through the noise, it is a bargain. This is a core holding for anyone building a defensive income portfolio.

Haleon plc (Ticker: HLN): The Medicine Cabinet You Own a Piece Of
Haleon is a pure-play consumer health business that was spun off from GlaxoSmithKline in mid-2022. It was formed by combining GSK's consumer health business with Pfizer's minority stake. Today, Haleon is the world's largest standalone consumer health company by revenue.

The company owns many of the most recognized and trusted over-the-counter brands globally: Sensodyne (oral care), Voltaren (topical pain relief), Centrum (multivitamins), Advil (pain), Panadol, Flonase (allergy), Theraflu (cold/flu), and Polident (denture care). These brands generate strong repeat sales, carry high margins, and are sold in over 170 markets worldwide.

Haleon's business model is built on brand strength, consumer trust, and distribution scale. It is not chasing high growth, but it is a cash machine. In 2024, the company produced over £11 billion in revenue and more than £2.3 billion in operating cash flow. Operating margins are in the 20% range, and management is targeting expansion through cost efficiencies and product innovation. While the company carries debt from the spin-off transaction, it is reducing leverage steadily and maintaining a manageable payout ratio.

What I like about Haleon is that it combines defensive characteristics—recurring demand, recession-resistant products, and a global footprint—with the potential for margin expansion and steady free cash flow growth. It is not flashy, but it is reliable. The dividend yield is currently around 1.8%, with plenty of room to grow. The company recently bought a minority stake in Tianjin Zhongjin Pharma in China, a move that could help unlock growth in Asia over the next five years.

Litigation related to the old Zantac product remains a headline risk, but the financial impact has been limited so far, and the market appears to be discounting the worst-case scenario already. With Pfizer having exited its stake and institutional support building, Haleon is finding its footing as a standalone public company. I expect further dividend increases and multiple expansion as debt comes down and earnings grow.

This trio of European companies offers a powerful mix of innovation, consistency, and shareholder return. ABB gives you long-term exposure to electrification and automation, with a hidden gem in its robotics business. Zurich is the steady compounder in global insurance, trading at a deep discount despite world-class fundamentals. Haleon is the definition of a consumer health cash cow with upside from debt reduction and margin gains.

Europe is set oft a continued rally into the second half of 2025 and well into next year. These stocks should help you cash in on the trend.