European stock markets are set to outperform in 2022. Here’s what I’m buying

European stocks are about to outperform in 2022, but from a long-term perspective Manika Premsingh believes that these stocks could give her some of the biggest returns. 

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The global investment bank Goldman Sachs asked its clients which stock market is expected to perform the best in 2022. Of the total, 36% believe that European stocks will outperform and 32% believe that it will be the US. Relatively few expect Asia and other emerging markets to outperform by comparison, as per a recent Bloomberg report. 

The fact that European stock markets are expected to be the best performing gives me faith in the UK’s markets in particular. The FTSE 100 index has already done pretty decently in January 2022. And going by recent growth forecasts, I believe that not just the FTSE 100 but the UK’s overall stock markets could continue to do so. Further, the International Monetary Fund (IMF) has just put its forecast for the UK’s economic growth at 4.7% in 2022. This is the fastest among major European economies, save Spain. I think both the mood and the tide is clearly turning towards the region. 

Spirax-Sarco Engineering is a buy on dip

I am anyway invested in UK stocks. And I think I am now even more convinced of buying more FTSE 100 stocks. I have had more than a few on my wish-list for a while now. One of them is the priciest stock among all index components. I am talking about the engineering biggie Spirax-Sarco Engineering, which has a current share price of £125. It is also pretty pricey in relative terms, with a price-to-earnings (P/E) ratio of 45 times. However, the stock has seen a fair bit of correction in the past few months. It is now at levels not seen since mid-2021. With its robust financial performance, optimistic forecasts, and long-term growth in share price, I think this is one for me to buy and hold for 10 years or more. This is true even if I have to deal with more near-term stock price correction. 

Segro could be a stock market outperformer

Another stock I have long liked is the FTSE 100 warehousing real estate investment trust (REIT) Segro. Like many other stocks that made big gains during the pandemic, it too is going through a correction right now. And it might just have dipped enough for me to step in and buy it going by its long-term prospects. I am a big believer in the potential of e-commerce. And after the pandemic it has become amply clear how massive the opportunity could be. Segro provides essential storage solutions, which should stay in demand. Besides that, it has performed quite well over the years as well. 

Smurfit Kappa Group is a good e-commerce investment

Finally, I also like the FTSE 100 packaging provider Smurfit-Kappa Group, which is also a long-term investment with its focus on e-commerce solutions. The company has raised some concerns about rising inflation and its share price has also dipped quite a bit in recent months. But still, from a 10-year perspective, I think there is much scope to make capital gains with this stock. It helps that it has a history of strong financial health too. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Manika Premsingh has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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