Analysing European stocks before buying or selling

The European stock market is attracting more and more online investors thanks to the volatility of its major exchanges, but above all thanks to the stocks of major European companies, which offer both high liquidity and interesting volatility for trading purposes. But how do you choose which stocks to invest in? To find out, we have decided to devote this article to the best European stocks according to various criteria, with the aim of helping you to spot them.

Trading European stocks: in brief

• There are various ways of investing in European stocks online
• You can buy and sell European stocks via a securities account
• You can also trade European stocks using CFDs
• Before trading in European stocks, it is essential to analyse their price.

How do I invest in European stocks online?

There are several ways of investing in European stocks online, including using a securities account to buy and sell stocks, and using Contracts for Difference (CFDs) for trading. Here's how you can go about each method:

Buying and selling European stocks with a securities account

Securities account: A securities account is a standard investment account for buying and selling European stocks. You can open a securities account with your bank or an online broker, and then buy and sell stocks according to your investment objectives and strategy.

Trading European stocks with CFDs

CFDs (Contracts for Difference) are derivatives that allow you to speculate on price movements in European stocks without owning the underlying asset. With CFDs, you can profit from both rising and falling stock prices, using leverage that can amplify your gains as well as your losses.

It is important to note that CFD trading carries a high level of risk because of the leverage involved, so it is important to fully understand how these products work and to manage your risk appropriately.

Before choosing the method that suits you best, it is advisable to take into account your investment objectives, your risk tolerance and your knowledge and experience of investing and trading.

How to choose the best European stocks :

Because of the diversity of the important financial centres in Europe, it is difficult to know which stocks to focus on.

In order to find stocks that may be interesting to buy, sell or to include in your stock portfolio, it is essential to evaluate different criteria, of which the following are a few specific examples:

• Financial health: First of all, it goes without saying that if you wish to buy one or more European shares or trade upwards on their price, you will have to take care to check the financial health and stability of the companies listed on this market. To do this, you will carry out an analysis based on the balance sheets that you can find online on the websites of these companies and which are published annually and quarterly. Don't forget also to compare the observed figures with expectations and targets, where available.
• The performance and return on equity : Of course, the history of the shares of these European companies is also a criterion of choice. You can therefore prefer to choose shares with an interesting performance, i.e. whose price is rising over the more or less long term, or so-called yield shares, i.e. shares of companies that pay out attractive dividends to their shareholders. It all depends on the strategy you adopt and your objective.
• The analysis of the sector of activity in which these shares are listed is also important since, depending on the periods and the economic environment, some sectors will be more interesting or more liquid and volatile than others. This sector analysis requires certain information and knowledge of the major economic data of the European Union.
• Finally, it is also possible to choose to invest in stocks for which current events are profitable. Indeed, there are many upward or downward movements in the stock market prices of certain securities during major events such as takeovers, repurchases, sales, mergers or strategic partnerships. Similarly, a company that is targeted or involved in a high-profile deal will have a better chance of attracting investors and may prove to be a wise choice. Ideally, you should therefore keep up to date with the latest news in each sector and the major companies listed on European stock market indices in order to detect opportunities.

However, we remind you that you are free to choose the title(s) that seem(s) best suited to your needs.

The European quotation places in detail :

A stock exchange, also known as a "financial centre", is a place, physical or virtual, where different assets are listed. In this case and for what we are interested in, these stock exchanges are in charge of listing the shares of major European companies.

Generally, these quotation places are located in major European cities, recognised as major players in the economy. These cities are most often chosen on the basis of their accessibility and the infrastructure they have in place to facilitate exchanges and for their financial institutions.

Although many European listings are in capital cities, this is not necessarily the case, as you can see from the list below.

What analysis should I carry out before investing in European stocks?

Before investing in European stocks, it is crucial to carry out an in-depth analysis in order to make informed decisions. Here are some key factors to consider when setting up your analysis 

Fundamental analysis:

• Study the company's fundamentals: look at financial statements, financial ratios (such as P/E, price/earnings ratio), revenue and earnings growth, and balance sheet strength.
• Analyse the sector of activity: understand market trends, competition, regulation and the sector's growth prospects at European level.
• Evaluate macroeconomic factors: take into account European economic data such as GDP, inflation, unemployment rates, as well as geopolitical and economic events that could influence the markets.

Technical analysis:

• Analyse price charts: identify trends, support and resistance levels and candlestick patterns to determine potential entry and exit points.
• Use technical indicators: tools such as moving averages, RSI (Relative Strength Index), MACD (Moving Average Convergence Divergence) can provide trading signals and indications of the strength of price movements.

Valuation analysis:

• Assess whether stocks are undervalued, overvalued or fairly valued relative to their fundamentals and sector peers.
• Compare valuation multiples such as PER (Price to Earnings Ratio) and P/B (Price to Book Ratio) with historical averages and sector competitors.

Market sentiment analysis:

• Track capital flows: monitor the movements of institutional investors and hedge funds in European stocks.
• Consider Sentiment Surveys: examine opinion polls and analyst reports to gauge market consensus on European stocks.

List of the main European stock exchanges :

Most of the shares you will be able to trade online on the stock exchange come from the major international stock exchanges. Some of the most popular of these stocks in the eyes of investors are those listed on European exchanges. To help you understand this, we have decided to give you a list of European stock exchanges and some information about them here.

There are many more major European stock exchanges than one might have thought at the outset. Here is a list of all the stock exchanges and possibly the stock exchange index attached to them:

• The Amsterdam stock exchange with the AEX and AMX indices.
• The Athens stock exchange with the ATHEX 20 index.
• The Belgrade stock exchange with the Belex 15 stock market index.
• The Brussels stock exchange with the BEL 20 stock exchange index.
• The Budapest stock exchange with the BUX stock exchange index.
• The Bulgarian stock exchange.
• The Cyprus Main Market (CYMAIN) stock market index.
• The Frankfurt stock exchange with the DAX stock exchange index.
• Iceland's stock exchange with the OMX Iceland All Share Index.
• The Istanbul stock exchange with the ISE 100 stock market index.
• The Lisbon stock exchange with the PSI 20 stock market index.
• The Luxembourg stock exchange with the LUXx stock exchange index.
• The Madrid stock exchange with the Ibex 35 stock market index.
• Malta is listed on the Maltex stock exchange index.
• The Milan stock exchange with the FTSE MIB stock market index.
• The Moscow stock exchange with the RTS stock exchange index.
• The Oslo stock exchange with the OBX stock exchange index.
• The Prague Stock Exchange with the PX stock exchange index.
• The Warsaw Stock Exchange with the WIG 20 stock market index.
• The Vienna Stock Exchange with the WBI stock exchange index.
• The Zurich stock exchange with the SMI stock exchange index.
• The Paris stock exchange with the CAC 40 stock market index.
• The London stock exchange with the FTSE stock market index.

Summary of the criteria to be assessed to detect the best European stocks?

As we have seen above, the European equities that are most popular with investors are often the best-performing stocks. But there are also other criteria to consider before deciding on which European stock to place your orders.

Indeed, depending on the duration of your strategy, you will be able to choose between securities with strong short or long term trends. It goes without saying that a stock that follows a certain trend over the long term will not necessarily show a very marked movement in the short term. Therefore, if you favour short-term strategies, you should analyse the short-term trends of the equity assets you choose.

You should also give preference to shares that you know well enough and whose sector of activity is not unfamiliar to you. This will give you a better chance of carrying out a good analysis of their share price and thus of implementing intelligent and optimal strategies.

Some short-term traders are also interested in companies that are in the news because of their interesting volatility at a specific time. To find interesting stocks, it is indeed necessary to look at the stock market as a whole and to take into account events that may favour or disadvantage a sector of activity or certain companies.

In all cases and before trading in one or more European equities, you must make relevant and accurate analyses of these securities, from both a fundamental and technical point of view, and thus make a more or less reliable assessment of their potential for growth or decline.