The 'Granolas' - a term used to describe the 11 largest European companies by market capitalization - could be making a comeback after being neglected in recent months, according to Goldman Sachs strategists on Friday.

This group - which includes GSK, Roche, ASML, Nestlé, Novartis, Novo Nordisk, L'Oréal, LVMH, AstraZeneca, SAP and Sanofi - has posted a stable performance over the past 12 months, while the rest of the Europe STOXX 600 index has risen by 14%, according to calculations by the American investment bank.

This discrepancy is explained by the New York firm's recent results, which fell short of market forecasts.

Over the past year, their valuations have depreciated by 6%, Goldman points out, with an average P/E that has fallen from 19x to 17.8x, one of the most significant devaluations observed in Europe.

As a further consequence, the valuation gap between these companies and their US peers - the 'Magnificent Seven' - has widened significantly, adds Goldman Sachs.

However, Goldman Sachs believes that the solid fundamentals of these 11 companies - which together represent one-quarter of the Old Continent's total market capitalization - could enable them to outperform the market once again.

The combination of rate cuts, a weak euro, possible positive earnings surprises, improving consumer confidence in China and a return to their ability to grow faster than their peers could act as material catalysts for a rebound", explains the bank.

Of the 11 'Granolas', Goldman Sachs says it has a recommendation on seven (ASML, Nestlé, Novo Nordisk, L'Oréal, LVMH, AstraZeneca and SAP), with an average upside potential of 22%.

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