Quantitative Strategies to Outperform the S&P 500 by Investing in Euronext Stocks

This article looks to investigate whether it is possible to create a strategy on which the investor selects individual stocks that can outperform the average returns of the Standard and Poor’s 500 (S&P 500) stock index. 311 non-financial companies listed on the Amsterdam, Brussels, Lisbon, and Paris stock exchanges were analyzed in the period between 2017 and 2022. For the analysis, we used the panel data methodology and the Generalized Method of Moments (GMM). The data imply that it is possible to achieve returns that surpass the S&P 500 by analyzing the growth, financial strength, and profitability of Euronext companies. It has been demonstrated that larger, less indebted, and more profitable companies tend to generate returns that are higher than those presented by the S&P 500. Both managers, who must prioritize sustainable growth and operational efficiency, and investors, who can apply the indicators presented in this study as stock selection criteria, can find important implications in these conclusions.