Abstract:

This article investigates whether it is possible to build a strategy based on selecting individual stocks that can outperform the returns of the Standard and Poor's 500 (S&P 500) stock index. The investigation analyzed 311 non-financial companies listed on the stock exchanges in Amsterdam, Brussels, Lisbon, and Paris between 2017 and 2022. To this end, the panel data methodology and the Generalized Method of Moments (GMM) were used. The results show that it is possible to obtain better returns than the S&P 500 by analyzing Euronext companies' growth, financial strength, and profitability. It has been demonstrated that larger, less indebted, and more profitable companies tend to generate higher returns than the S&P 500. These conclusions have important implications for both managers, who must focus on sustainable growth and operational efficiency, and investors, who can use the indicators in this study as stock selection criteria.