European stocks are having a good year so far. According to Bernstein’s analysis, the Stoxx 600 benchmark is up about 7% since the start of 2023 — the strongest start in more than 26 years. That’s better than the S&P 500, which delivered 5.8% during the same period. While the underperformance is negligible, the outlook for US stocks is clearly more muted – Wall Street remains wary of a recession. According to Bernstein, European stocks are worth looking at in the near term. “We think there’s still a moderate uptrend. The area is still trading at well below its historical average multiples, both in absolute and relative terms. It’s still cheaper than usual compared to normal. with the US,” said Bernstein analysts, led by Sarah McCarthy. 24 note. The bank added that there is more opportunity for a “positive earnings surprise” in Europe than in the United States, due to lower earnings expectations for the previous year. this. Also, for the first time ever, stock buyback yields are higher in Europe than in the US, according to Bernstein. Stock picks One of Bernstein’s top games is low leverage stocks, which the bank defines as stocks with a low net debt-to-equity ratio. “Our macro analysis shows that Europe’s low leverage may perform better when leading indicators predict a recession and also when interest rates rise, as is the case now,” strategist Mark Mark said. Bernstein’s Diver wrote Jan. 19, adding that low-leverage stocks have been profitable. The annual average was 8.7% in previous European recessions, he added. The bank’s top rated picks in this area are Publicis Group , LVMH Moet Hennessy , L’Oréal , Equinor and Airbus . Barclays is also “tactically serious” for Europe than it is for the US because it sees the region’s stocks as low and cheap. It named seven “catalyst persuasive stock ideas” in the coming quarters, which it said have an average upside potential of 25%. Finland’s Neste refinery was shortlisted by the bank, based on the bank’s view of a global shortage of renewable diesel to support product prices until at least 2024. Barclays also likes German energy company RWE for its “undervalued” renewable growth pipeline. Barclays analyst Rob Bate wrote on Jan. 20: “We believe investors are looking at RWE’s transition into the third-largest renewable energy company in Europe, particularly in relation to RWE. regarding their renewable energy growth pipeline”. The bank said it believes the company can deliver low-to-mid single-digit revenue growth, which will translate into increased free cash flow, which should support dividend payouts. company news. Morgan Stanley names some stocks to buy ahead of Europe’s hotly anticipated earnings season. These include Universal Music Group, whose share price the bank expects will rise during earnings season, as well as French hotel group Accor, which Morgan Stanley expects will deliver a strong and beating fourth quarter. consensus estimates. Other options include SAP, Teleperformance, and Elis. Bank of America has some options in Europe thanks to higher Chinese consumer spending and improved overall demand due to China’s reopening. According to Bank of America, Dutch technology investment group Prosus NV derives 80% of its revenue from China, giving it the highest level of sales in the long run. Other stocks with more than 30% of revenue coming from China include BMW, Standard Chartered, HSBC, Infineon Technologies, Porsche and Swatch. – Michael Bloom of CNBC contributed to the report