Advertisement
Foreign Stocks & Emerging Markets

World's Greatest Stocks: SAP

Our search for great stocks from around the world led us to Europe's largest software company.

We went looking for the greatest companies outside the U.S. and came up with eight proven picks. Here's one of them: SAP (symbol SAP). To make the list, the businesses had to have U.S.-traded shares and be industry leaders. They also had to possess substantial financial resources to weather rough economic times. Finally, we sought companies that had significant catalysts to drive the next phase of their growth.

Read more about the case for investing in SAP below. Prices and related figures for U.S.-traded shares are as of August 23. Earnings estimates are for calendar 2016 and 2017, unless otherwise noted. Price-earnings ratios are based on estimated 2016 earnings, unless otherwise indicated. Also, take a look at seven more great stocks from around the world.

SAP

Headquarters: Walldorf, GermanyShare price: $87.78Market capitalization: $105.2 billionEstimated earnings per share: 2016, $3.90; 2017, $4.41Price-earnings ratio: 22P/E ratio on 2017 estimate: 20Dividend yield: 1.5%

Advertisement - Article continues below

The business: SAP is Europe's largest software company and the third-largest worldwide, after Microsoft (MSFT) and Oracle (ORCL). Founded in 1972, SAP provides myriad software programs for businesses, managing such functions as finance, human resources, logistics and data storage.

Track record: From its 2002 low through 2012, SAP stock was a big winner, rising about 800%, or 24% annualized, and far outperforming the average blue chip. But since 2012, the shares have stagnated. SAP has been aggressively buying smaller software firms and spending heavily on research, planning for the shift toward software delivery to clients via the Internet (the cloud). Although annual revenues rose from $16.1 billion in 2011 to a record $23.5 billion in 2015, earnings per share fell 11%. What's more, some investors feared that SAP clients would balk at the firm's latest software-upgrade plan, known as S/4 HANA. But the second quarter of this year may have marked a turning point: SAP's software sales rose a larger-than-expected 7% from the same period in 2015, led by cloud software demand. The stock jumped.

Advertisement
Advertisement - Article continues below

Reasons to own it: Brokerage Credit Suisse says the second quarter demonstrated that SAP is "successfully managing the progressive move to the cloud." What's more, a surprising 40% of the companies signing up for the new S/4 HANA business-application software suite were first-time clients, which is a good sign. If SAP’s huge base of longtime clients shifts to S/4 HANA as expected, the company "stands to regain business momentum over the next several years," says investment research firm Cowen & Co. A pickup in earnings also could lead to a more generous dividend.

Advertisement

Most Popular

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)
tax deadline

12 Tax Deadlines for July 15 (It's Not Just the Due Date for Your Tax Return)

Between due dates for IRA or HSA contributions, paying estimated taxes and other deadlines, there's more to do by July 15 than just filing your federa…
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
Know Why Your Credit Score Changes: 9 Money Moves to Consider
credit & debt

Know Why Your Credit Score Changes: 9 Money Moves to Consider

Your credit score is a key indicator of your financial well-being and of the risk you pose to lenders. How good is yours?
July 10, 2020

Recommended

3 Municipal Bond Funds for Rich, Tax-Friendly Yields
Investing for Income

3 Municipal Bond Funds for Rich, Tax-Friendly Yields

Municipal bond funds allow you to enjoy the benefits of tax-exempt income. By investing in CEFs, you can sweeten the pot even further.
July 13, 2020
2020 Stock Market Holidays and Bond Market Holidays
Markets

2020 Stock Market Holidays and Bond Market Holidays

Is the market open today? Take a look at which holidays the stock markets and bond markets take off in 2020.
July 10, 2020
65 Best Dividend Stocks You Can Count On
stocks

65 Best Dividend Stocks You Can Count On

These 65 Dividend Aristocrats are an elite group of dividend stocks that have reliably increased their annual payouts every year for at least a quarte…
July 8, 2020
13 Best Vanguard Funds for the Next Bull Market
mutual funds

13 Best Vanguard Funds for the Next Bull Market

Optimistic that the bounce since March is indeed the start of the next bull market? Here are the 13 best Vanguard funds to help you make the most of i…
July 7, 2020