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Best Stocks for a European Comeback

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Although the European crisis scared investors for the last year or so, the region is looking more attractive now, especially now that China's growth is slowing considerably.

For savvy investors willing to take a little risk, Europe is looking good right now.

For the past year or so, the European crisis has scared investors out of the region, plus there were far more attractive opportunities in emerging market countries. However, China’s once stellar growth has slowed considerably and now is looking like the right time to rebalance with more exposure to Europe.

According to J.P. Morgan, investors who think the tides are turning for Europe should adjust their exposures now — before they miss the boat. Although timing the market is not possible, it’s an undeniable fact that the best strategy is to buy when stocks and markets are low (like Europe is) and sell when they’re high.

"Granted, Europe is not likely to grow at the pace of [emerging markets], but a positive turn is still a positive turn," Business Insider reported Tom Lee, J.P. Morgan’s top equity strategist, as saying.

Recently J.P. Morgan looked at North American companies and their exposure to both Europe and the emerging markets. Based on the changing investment desires of their clients, the following companies have revenue exposure to Europe that is greater than 25% and to emerging markets less than 10%.

Here are the four stocks on the list in the biotech and health care industries. The current price is based on the opening price on July 30. Target price and exposure from J.P. Morgan; other stock information from Yahoo! Finance.

4. Edwards Lifesciences

Ticker: EW

Industry: Health care equipment

Current price: $71.02

Target price: $64

52-week high: $110.79

Price-earnings ratio: 20.61

Earnings per share: $3.42

European exposure: 29%

Emerging markets exposure: 0%

Edwards Lifesciences beat expectations in Q2 as earnings per share increased 22.39%.

3. Biogen Idec Inc.

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Ticker: BIIB

Industry: Biotechnology

Current price: $216.87

Target price: $210

52-week high: $242.64

Price-earnings ratio: 32.06

Earnings per share: $6.75

European exposure: 30%

Emerging markets exposure: 2%

Biogen reported Q2 revenues of $1.7 billion, an increase of 21% compared to the same time last year.

2. St. Jude Medical Inc.

Ticker: STJ

Industry: Health care equipment

Current price: $52.24

Target price: $60

52-week high: $52.72

Price-earnings ratio: 24.60

Earnings per share: $2.12

European exposure: 26%

Emerging markets exposure: 8%

St. Jude Medical reported net sales of $1.4 billion in Q2, which was down slightly from $1.4 billion Q2 2012.

1. Gilead Sciences Inc.

Ticker: GILD

Industry: Biotechnology

Current price: $61.96

Target price: $80

52-week high: $64.04

Price-earnings ratio: 34.61

Earnings per share: $1.79

European exposure: 30%

Emerging markets exposure: 0%

Gilead Sciences’ $2.77 billion in total revenues in Q2 2013 is up 15% from the same quarter a year ago.


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