Analyst names the little-known tech stock that outperforms the FAANGs

Published Wed, Feb 17 20211:58 AM EST

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

U.S. tech companies Facebook , Apple , Amazon , Netflix and Google parent Alphabet may have dominated markets in recent years, but there's a much lesser-known name that investors are currently missing out on, described as a "world leader" by analyst Chris Dyer. Dyer, a director of global equity at U.S. investment firm Eaton Vance, named a tech stock that has outperformed all of the FAANGs over the past five years. Speaking to CNBC's "Street Signs Europe" on Tuesday, he described the company as: "(A) world leader, the only company that's able to supply the products that it does and that really puts it at a unique position, (a) technological advantage that will not be surpassed, we think, in the coming years." That company is Dutch semiconductor supplier ASML , a firm that manufactures chip-making equipment. "They provide the equipment that really facilitates the technological innovation that's taking place. And so, without their innovation, you don't get the progress with the next smartphone, you don't get data centers being able to process and store as much data as they currently do," Dyer stated. ASML employs 28,000 people and most of its net sales for 2020 were in Asia, which generated 11.8 billion euros ($14.29 billion). U.S. sales were 1.7 billion euros and EMEA sales were 500 million euros, per its 2020 annual report. Its stock price has increased by 26.12% in the year to date, outperforming Alphabet's 20.11% rise. Amazon has gone up 0.64%, while Apple's price has risen 2.02% and Netflix is up 2.92%. Facebook is down 0.9% year-to-date. "If you look at their price performance over the last five years, relative to all the FAANG stocks, they've actually outperformed those companies, which is pretty remarkable because not a lot of people know about ASML, it's not a consumer good. It's not a household name," Dyer added. ASML's stock has risen nearly 540% in the last five years, just beating the percentage gains from the likes of Netflix, Apple and Amazon. The excess consumer savings that we see across the globe is waiting to be unleashed Director of global equity, Eaton Vance Chris Dyer Dyer also picked two other names that are "poised to outperform": French luxury group LVMH and Irish building materials company CRH , which is a large roadbuilder in the U.S. While LVMH underperformed in the early part of 2020 due to the impact of the coronavirus pandemic on Chinese consumers, Dyer said it had a "strong" recovery in the fourth quarter, especially in its fashion and leather goods division. "This is a company that has a great luxury brands, they have great pricing power, and they have a long runway of growth," Dyer stated. As global travel picks up this year and next, LVMH is set to be a "main beneficiary" as people buy their goods in airport stores. "The excess consumer savings that we see across the globe is waiting to be unleashed," he added. Dyer chose CRH as he said it "benefits from value and cyclical orientation," in an email to CNBC. Cyclical stocks are those that rise and fall with the economy. In comparison to the U.S., European stocks look set to outperform, Dyer said. "Valuations in Europe remain at multi-decade discounts to the U.S. market. And then importantly, the second factor is value and cyclicality of the European market is much more prevalent with value and cyclical factors which should outperform at this stage of an economic recovery. And then third is global trade: European companies are much more geared into global trade," he stated. As the global economy re-starts this year European firms will likely benefit as U.S. companies focus on the domestic market more, Dyer said. However, the risk to European stocks is the lag in vaccine rollouts , Dyer added. "If you look at results as they've come through, generally, while Europe has outperformed the U.S. in terms of the beats, the earnings are still down in Europe year on year in Q4, whereas in the U.S., the earnings are actually up year on year. And so the U.S. is a little bit further ahead in terms of the reopening and the economic progress that they're seeing, we need to see that come through in Europe," he said.

VIDEO0:0000:00

2021 will be an 'important year' for stock selection, says equity analyst

Street Signs Europe

Dyer, a director of global equity at U.S. investment firm Eaton Vance, named a tech stock that has outperformed all of the FAANGs over the past five years.

Speaking to CNBC's "Street Signs Europe" on Tuesday, he described the company as: "(A) world leader, the only company that's able to supply the products that it does and that really puts it at a unique position, (a) technological advantage that will not be surpassed, we think, in the coming years."