Why investing in European value stocks?

For years, Europe has been overlooked by international investors, who have preferred the region's popular growth stocks over many attractively priced yet less exciting options. However, the time may now be ripe for these undervalued stocks to gain attention.

In 2025, investors have started to rediscover Europe. This shift is partly due to anxious investors seeking alternatives to U.S. assets, but it is also driven by fundamental changes taking place in the region. Germany, Europe’s largest economy, is leading a push for increased spending on defence and infrastructure, which is anticipated to stimulate substantial economic growth. Many companies poised to benefit from this revitalisation are among those overlooked, cheaper stocks.

It might also surprise many investors that the value investment style has been thriving in Europe in recent years. With a wide valuation gap between the most expensive and the cheapest stocks in the market, coupled with some potentially powerful tailwinds, we believe that there is plenty of scope for value stocks to continue performing well. A new narrative is unfolding in Europe that could usher in more promising times for value stocks.

In our view, the current environment is very favourable for European value investors. We see a broad spread of value opportunities across different sectors and countries, not simply confined to distressed or struggling companies. We believe robust, well-funded value stocks can be found across the market, enabling investors to construct a diversified portfolio of mispriced European companies with attractive prospects.

The investment story for Europe appears increasingly positive, creating a potentially exciting chapter for value investors, in our view.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested. Past performance is not a guide to future performance. The views expressed in this document should not be taken as a recommendation, advice or forecast, or a recommendation to purchase or sell any particular security.