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LONDON -- Last month saw a lot of ups and downs in European shares. Most economic data, whether from the U.S., Europe or Asia, all seemed to point toward slowing growth and uncertainty, although some optimism continent did come through after the European Central Bank (ECB) said it would do "all it takes" to stop a break-up of the euro. German Chancellor Angela Merkel, after some words of warning, effectively said the German government agreed with this and backed the potential for bond buying.
Despite these uncertainties, however, some companies were able to put in a stellar performance. Here are five stocks that were not only able to make strong gains in August, but that have the potential to build on this growth.
Banco Santander (+16%)
Amid a generally uncertain month in Spanish financials, Banco Santander (NYSE: SAN ) shares climbed high as its position as the country's largest lender helped it weather a storm that saw many rivals hit hard. This included news that as part of the rules governing the Spanish banking bailout, regulators would be able to shut down unprofitable banks.
Naturally, this led to much uncertainty, particularly for those firms that could be in line for the chop, but Santander was able to shrug off the worries and hold strong. This is a story that still has a long way to play out, and the broader consequences to Santander should probably still cast a shadow over potential upcoming gains.
For those of you who follow the financial news daily, it will come as no surprise at all to see the Finnish handset maker in this line-up. August saw a generally strong month for Nokia (NYSE: NOK ) , although the odd headwind did curb gains; Nokia shares at one stage were up over 25%. Fundamentally, the news pushing the share price can be boiled down to two main drivers.
Firstly, news that it will be unveiling its latest smartphone, which will be using the Windows 8 operating system, ahead of Apple's upcoming release of an improved iPhone in September.
Secondly, and more importantly, later in the month, a U.S. jury ruled that rival firm Samsung had infringed on patents held by Apple, leaving the Korean firm's phones open to being withdrawn in the U.S. market. This immediately offered investors hope that Nokia will be one of the company's 'filling the gap' for these smartphones, particularly after Verizon Wireless had said earlier in August that it will be selling Nokia's latest Lumia handset when it is released.
Telecom Italia (+12%)
Telecom Italia (NYSE: TI ) was able to make strong headway in August, starting the month on the right note after it showed strong earnings results toward the end of July. In addition, a ban in Brazil that was stopping TI's subsidiary in the country from selling phones was lifted, offering a new lease of support. This did come into question at one point following a Brazilian newspaper report suggesting the company purposefully cut off customers calls, despite them being under the unlimited coverage tariff, known as infinity. The company stringently denied this, however, and over the course of August, little more came of it.
The Dutch insurer Aegon (NYSE: AEG ) managed to climb 11% in August thanks almost entirely to posting stronger than expected earnings early in the month. Second-quarter net income climbed to 254 million pounds, in the main thanks to a 27% jump in sales. This not only showed an unexpected improvement, but absolutely smashed analyst estimates at the time, which were expecting Q2 net income more in the region of 88 million pounds.
The latest report showed that profit in its American unit, which accounts for more than 75% of the company's total earnings, climbed 8% in Q2 to 339 million pounds. This is important as combined with an increasingly diversified investment plan, specifically designed to move away from volatile assets, as well as an improved pricing plan and adjustments for Aegon customers, the company is able to offset low interest rates and uncertainty in Europe. Aegon went as far as to say it expects an annual growth rate in profits of between 7% and 10%.
Delhaize Group (+8%)
Belgium supermarket operator Delhaize Group (NYSE: DEG ) saw gains this month entirely on the back of a strong earnings performance. The company was able to begin its climb early in August, preempting the results after analysts at Citigroup said they expected Delhaize to have a strong free cash flow compared to its competitors. When the company published its results a week later, this proved to be true.
In addition, the company, which owns and runs the U.S. Food Lion chain of stores, said that like-for-like sales growth in these 434-strong stores grew 3%, thanks in the main to reduced prices across the stores bringing in new customers. Overall operating profit for Delhaize fell 18% to 184 million pounds, although this still beat analyst estimates, which expected closer to 174 million pounds.
Buffett is still buying
This month's European trading has provided its fair share of ADR losers -- and perhaps some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying a prominent European stock that has slumped this year.
If you want to know why Buffett has bought into Europe, I'd encourage you to read "The One European Share Warren Buffett Loves" -- a special Motley Fool report that reveals the stock Buffett purchased and the price he paid. You can download the report today for free. But hurry -- it is available for a limited time only.
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Further Motley Fool investment opportunities:
- The One European Share Warren Buffett Loves
- Eight ADRs Held By Britain's Super-Investor
- The Market's Top Sectors
Karl does not own any share mentioned in this article.