Rheinmetall and Thales join the stock market club of the “Magnificent Seven” of European sovereignty
According to an Oddo BHF analysis of 127 European companies in the sovereignty sector, defense now leads the way in terms of stocks with high valuation potential, a major shift following the war in Ukraine. The study identified seven "Magnificent Seven," including giants Rheinmetall and Thales, whose earnings per share (EPS) are expected to grow by 24% per year through 2027, as well as 20 "rising stars" (including four "khaki" stocks) with an average EPS growth forecast of 44%. This renewed interest is fueled by the significant increase in NATO and European military budgets, targeting 3% of GDP for European defense by 2030, and by a shift towards "Made in Europe", with continental industry having captured 75% of new orders since the end of 2024. Despite increases in production rates, the study nevertheless highlights persistent gaps in Europe, particularly in long-range air defense and drones, which still require dependence on American technologies and systems.