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The S&P Should Beat These Stocks Today

By Karl Loomes – Updated Apr 7, 2017 at 1:20PM

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Poor profit margins, joint ventures, and buybacks have these three losing ground.

LONDON -- Stock markets are mixed in Europe Tuesday, with peripheral countries seeing a more upbeat session than their counterparts in the core EU. Yesterday's Labor Day holiday leaves many investors waiting to see how the U.S. markets open today, with hopes that they will catch up with the rally in European stocks at the start of the week. Meanwhile, all eyes are on the manufacturing report coming from the U.S. in hopes of an economic recovery, given last week's poor numbers from Asia and the EU. So far futures trading is offering little insight into the U.S. markets, with the S&P 500 (INDEX: ^GSPC) currently flat.

Nevertheless, there are still a number of companies suffering sharp losses. Here are three American depositary receipts the S&P should beat today.

Vodafone Group (Nasdaq: VOD)
In a move counter to its new joint-venture partner, Telefonica (NYSE: TEF), Vodafone is down more than 2% on news that it is set to win EU approval with Telefonica and Everything Everywhere to create a new U.K. mobile-phone payment platform. The European Commission is set to approve a deal as soon as this week, which will see Vodafone, Telefonica's U.K. unit, and the Everything Everywhere partnership combine in a new joint venture to create a platform that should allow easy mobile shopping and payment via smartphones. The commission began investigating concerns earlier this year that the group would be able to block competitors from offering their own "mobile wallet" to U.K. customers.

Sanofi (NYSE: SNY)
The pharmaceutical giant is down almost 2% today after it said it plans to buy back up to $152 million worth of contingent value rights, linked to its purchase of Genzyme in 2011. CVRs are a tradable security that gives payouts to Genzyme investors if certain revenue targets are met, and this latest news of a buyback indicates Sanofi's growing confidence in Genzyme's multiple sclerosis drug Lemtrada. The company said it would purchase the CVRs for between $1.50 and $1.75 each -- a premium of between 7% and 25% of their market value, though still far below the $2.40 price tag at issuance.

Deutsche Bank (NYSE: DB)
Deutsche Bank is down around 1.5% today after co-CEO Juergen Fitschen said profit margins in Europe's banking industry will remain under pressure. The comments, which many see as specifically reflecting the prospects of DB itself, suggest that the sovereign-debt crisis is curbing client activity in the banking sector, while at the same time, competition is increasing. Fitschen, speaking at a banking conference in Frankfurt today, said low margins and higher capital requirements are "the new normal" and warned that the industry cannot rely on the assumption that dramatic growth opportunities will solve its problems in a swift and timely fashion.

As usual, this morning's European trading saw some stocks lose ground -- and perhaps provide some European buying opportunities. Indeed, legendary investor Warren Buffett has recently spent more than $1 billion buying a European large-cap stock that's currently trading well below its 2012 high. If you want to know what Buffett has bought within Europe, this special Motley Fool report -- "The One European Share Warren Buffett Loves" -- reveals everything, including the price he paid. You can download the report today for free, but hurry -- it's available for a limited time only.

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Karl Loomes does not own any share mentioned in this article. Motley Fool newsletter services have recommended buying shares of Vodafone Group. The Motley Fool has a disclosure policy.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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Stocks Mentioned

Sanofi Stock Quote
$38.00 (-0.45%) $0.17
Deutsche Bank Stock Quote
Deutsche Bank
$7.46 (-2.61%) $0.20
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
$3,640.47 (-2.11%) $-78.57
Vodafone Group Plc Stock Quote
Vodafone Group Plc
$11.34 (-2.74%) $0.32
Telefónica, S.A. Stock Quote
Telefónica, S.A.
$3.24 (-2.70%) $0.09

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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