Tapping into Europe’s Next Chapter of Growth
As part of WestEnd’s on-the-ground research efforts, Senior Equity Analyst Ali Mogharabi spent several days in Europe engaging directly with leadership teams at companies that have caught our interest. Of the five companies Ali visited on his trip, we’ve invested in three (detailed below).
A key catalyst in this moment is Germany. It’s the continent’s largest economy, and policymakers recently committed to €500 billion in fiscal stimulus over the next 12 years. This move is basically unheard of for Germany, which has been known historically for its fiscal restraint. Much of the spending is earmarked for infrastructure modernization and green energy—a move that could lift both domestic demand and pan-European economic momentum.
Meanwhile, geopolitical instability and a shifting global security landscape are driving a substantial increase in European defense budgets. After decades of underinvestment, Europe’s defense spending has finally met the 2% of GDP NATO benchmark, and Blackrock estimates that several NATO members are now expected to raise defense and infrastructure outlays to a combined 5% of GDP. This sea change was a key driver in WestEnd’s thesis to own German-based defense company Rheinmetall.
Valuations are also an important part of WestEnd’s interest in Europe. European stocks continue to trade at a discount to U.S. counterparts, with the Euro Stoxx 50 priced at just 15x forward earnings, compared to over 20x for the S&P 500. Add in the region’s higher dividend yields and different sector exposures—more industrials and financials, less tech—and European equities begin to look like an attractive complement to a U.S.-centric portfolio.
Below we detail three new Core names with Ali’s takeaways from his trip:
Rolls-Royce Holdings plc (UK)
Rolls-Royce is a global engineering company that designs, manufactures, and services power systems across aviation, energy, and defense. It is especially known for its leadership in large jet engines and its emerging role in next-generation nuclear energy.
Our ownership thesis:
Momentum is strong in both new engine deliveries and aftermarket services, with higher-margin maintenance work helping expand profitability.
Management is considering re-entering the narrow-body jet engine market, positioning the firm to tap into long-term commercial aviation demand.
Selected by the UK government to build Small Modular Reactors (SMRs), a scalable nuclear technology with fast deployment timelines and growing international demand.
SMR demand is being driven by global efforts to secure clean, domestic energy and reduce reliance on imported fuels.
Capital return strategy favors share buybacks while reinvesting in R&D—supporting a forward-looking, innovation-driven growth model.
ConvaTec Group plc (UK)
ConvaTec is a global medical technology company focused on advanced wound care, ostomy and continence products, and infusion therapies that improve patient outcomes and quality of life.
Our ownership thesis:
New product launches such as ConvaFoam and ConvaNiox are helping drive strong growth in advanced wound care.
Innovative use of pig-skin technology in InnovaMatrix offers a cost-effective, high-margin alternative to competitors' fish-skin products.
The addressable market for chronic wound healing is expanding, expected to triple to over $3 billion by 2030.
Strong pipeline in Ostomy and Continence Care segments, including U.S. rollout of the discreet, user-friendly GentleCathAir catheter.
Operational improvements are enhancing efficiency, helping earnings grow faster than revenue—while maintaining a stable 40% dividend payout ratio.
Adyen N.V. (Netherlands)
Adyen is a leading fintech platform providing unified payments infrastructure to large global merchants across online, mobile, and in-person channels.
Why we’re investing:
Platform stickiness remains high, especially among enterprise clients using Adyen Capital and Uplift, which integrate AI into product testing and development.
The company has resisted pressure to lower fees, thanks to strong client relationships and high switching costs.
Recent churn was largely pricing-related, and many clients are returning; management doesn’t expect a similar dynamic going forward.
Positioned to benefit from long-term trends in AI-powered payments, data security, and evolving financial rails.
Strong outlook in key verticals like retail and travel, with capabilities to support both traditional payments and future shifts such as stablecoins or tokenization.
Notes and Disclaimers
i Important Account Minimum Reminder: Per our management agreement, WestEnd Capital maintains a minimum account size of $500,000. If the Rheinmetall trade was not executed in your account, it is likely due to your account not meeting this minimum threshold. We remain committed to providing tailored guidance and appropriate opportunities based on each client’s individual portfolio. If you have any questions about your account or how this may apply to you, please contact us.
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