Forget the Magnificent 7: “GRANOLAS” Stocks Are up Big and Are Far Less Risky

Magnificent 7 stocks are looking volatile, which is why it might be time to get a heaping spoonful of GRANOLAS stocks.

You Should Know This

Image source: Getty Images

There continues to be concern about how much the “Magnificent 7” stocks are taking up the S&P 500. These companies have led the charge with the S&P 500’s growth over the last year. While shares are up 25% in the last year, there is a bit of a caveat to that.

That caveat is that without the Magnificent 7 stocks, the growth for the S&P 500 is quite a lot lower. That’s because most of the market hasn’t grown by double digits. These stocks are now worth more than even many of the G20 countries!

What’s the problem?

The main problem is that if these companies start to slump in share price, they could trigger a huge drop in the market. In fact, that could be likely in the near future. Investors have been pouring cash into these tech stocks, seeing shares rise higher and higher. But the tides could already be turning.

Part of that comes from earnings. Some have counted on earnings being above and beyond estimates. And if that doesn’t happen, investors have taken out their returns. This may continue to happen as we see interest rates remain elevated.

That’s why instead of looking at the Magnificent 7, it might be time to consider the GRANOLAS. These are companies that Goldman Sachs termed back in 2020. And instead of focusing on American companies, it provides exposure to European stocks instead.

What are GRANOLAS stocks?

The companies that take up GRANOLAS are GSK, Roche, ASML Holding N.V., Nestlé, Novartis, Novo Nordisk, L’Oreal, LVMH Moët Hennessy – Louis Vuitton, Société Européenne, AstraZeneca, SAP (NYSE:SAP), and Sanofi.

Yes, it’s a mouthful but a mouthful of delicious growth. Since January 2021, these companies have been able to keep right up with the Magnificent 7. In fact, not only have they kept up, but they’ve been able to see a lot less volatility and fewer drops in share price.

Furthermore, these companies provide a cheaper share price for investors. Most trade around 20 times earnings, compared to 30 times earnings in the Magnificent 7. And, keep in mind, that’s while trading in the more expensive European market.

Consider them now

Another benefit is these are companies you can always buy, no matter market conditions. Each has seen consistent growth even in difficult economic conditions. That comes from strong growth, sure, but also predictable growth as well.

Now, of course, it can be confusing to invest in all these stocks. But overall, these companies have seen strong double-digit growth. What’s more, unfortunately, there isn’t one exchange-traded fund that invests in them all at this point.

But take it this way. By investing in these companies, you’re gaining global exposure beyond Canada and the United States. You’re also getting away from the volatility of the Magnificent 7. I’d say that’s a huge win — one that will add superior long-term passive income to your portfolio.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends ASML and Roche Ag. The Motley Fool has a disclosure policy.

More on Stocks for Beginners

A data center engineer works on a laptop at a server farm.
Tech Stocks

Why Hut 8 Stock is Up 44% in the Last Week

Hut 8 stock (TSX:HUT) has surged in the last week, and even more year to date. But if you think…

Read more »

Coworkers standing near a wall
Tech Stocks

Why Nvidia Stock Fell 10% Last Week

Nvidia stock (NASDAQ:NVDA) fell by 10% last week after its competitor announced an earnings date, but without preliminary results.

Read more »

edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.
Dividend Stocks

Got $5,000? Buy and Hold These 3 Value Stocks for Years

These essential and valuable value stocks are the perfect addition to any portfolio, especially if you have $5,000 you want…

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Stocks for Beginners

What Investors Should Take Away From WinPak Stock’s Earnings

WinPak (TSX:WPK) stock has stagnated in share price over the last few years, but has there been enough momentum to…

Read more »

bulb idea thinking
Stocks for Beginners

3 No-Brainer Stocks to Buy Now for Less Than $1,000

If you're looking for companies bound for more greatness, these three no-brainer stocks are easy buys, no matter what the…

Read more »

Dollar symbol and Canadian flag on keyboard
Stocks for Beginners

TFSA: 4 Canadian Stocks to Buy and Hold Forever

Here are four stocks that you can buy and hold for decades in your TFSA.

Read more »

Young adult woman walking up the stairs with sun sport background
Stocks for Beginners

New to Investing? This Step-by-Step Guide Will Get You Started

New to investing? Then follow this guide to help you get started, by paying off your debts and saving towards…

Read more »

Man with no money. Businessman holding empty wallet
Dividend Stocks

3 Ways Canadian Investors Can Save Thousands in 2024

If you've done the budgeting and are still coming out with less money than you'd like, consider these three ways…

Read more »