Bank of America reveals the European stocks with the most potential in times of economic uncertainty

Bank of America markets


IMPORTANT POINTS:

  • Bank of America has identified European stocks with performance potential in different economic phases.
  • Stocks selected were based on their ability to withstand fluctuations in downturns, recessions, and booms.
  • Estas acciones actualmente se negocian con un descuento del 28% en comparación con sus precios promedio de la última década.

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Bank of America has released a list of European stocks that are expected to perform favorably in different economic phases. Using its Style Cycle model, the bank selected stocks based on their ability to withstand fluctuations in a downturn, recession, and boom economy.

In her report to clients, Paulina Strzelinska, Bank of America Quantitative Strategist, mentions that we are currently in the “Slowdown” phase, but we are close to crossing over to the next phase. Historically, the phase of“Recesión” es la que sigue típicamente a la fase de “Desaceleración”, pero en ocasiones anteriores también se ha observado una fase de “Auge” después de la “Desaceleración”.

During a slowdown, economic growth softens without actually stopping. In this scenario, Bank of America looked for high-quality stocks, large in size, with a focus on growth rather than value, upside momentum, and low risk.

On the other hand, a recession is defined as negative growth for two consecutive quarters, leading to job losses and decreased consumer spending. For this scenario, the bank selected high-quality stocks, large in size, focused on value rather than growth, and low risk.

In contrast, during an economic boom, you experience rapid expansion with an increase in output, employment opportunities, and general wealth. For this situation, Bank of America identified stocks it views as a value rather than growth, with upside momentum, high risk, low market capitalization, and low quality.

The list includes companies such as ASHTEAD GROUP, Infineon Technologies, STMicroelectronics, SSE, Swatch Group, Dassault Aviation, HSBC Holdings, Coca-Cola HBC and Siemens, among others.

According to the bank, these companies are currently undervalued by 28% compared to their average prices of the last decade, which represents the biggest discount since 2020.

The bank’s European Macro Composite Indicator index shows signs of slowing down but is nearing a point where it could enter a recession or boom, which would affect the performance of selected stocks.

In conclusion, Bank of America has identified a list of European stocks that are expected to perform well in different economic phases. These stocks were selected based on their ability to withstand fluctuations in a downturn, recession, and boom economy. However, it is important to note that the performance of these shares will be subject to changes in economic and financial conditions.