Credit Suisse Likes These Three Sectors
European leaders have agreed upon a new set of crisis fighting measures, while taking one step closer to a full fiscal union. Analysts at Credit Suisse highlight that the new measures were a surprise. In the medium-term, these events should be market positive. In a report published Friday, Credit Suisse highlights a few asset classes that they like in this environment:
Italian Stocks: Credit Suisse notes that Italy has a primary budget surplus, relatively long maturity on its debt, and a large manufacturing sector that could benefit from a weaker euro (they see the euro falling to 1.10 against the U.S. dollar). A weaker currency makes exports more attractive to foreigners. The large manufacturing sector could generate further returns from international sales. "Italy is the cheapest market in Europe on P/E and P/B relatives to its norm. The three stocks that are Outperform rated by Credit Suisse analysts are ENI, Lottomatica and Fiat," Credit Suisse notes.
French Stocks Credit Suisse prefers French stocks with foreign sales exposure. "The following stocks look cheap on our screens, with low CDS spread and very high international earnings: Schneider, Sanofi, Publicis," Credit Suisse notes. The lack of growth in Europe compared to the rest of the world makes companies that have foreign sales look attractive, especially if the euro is expected to weaken. As with Italian manufacturers, these may be names for traders to consider for their portfolios.
U.K. Banks Credit Suisse prefers Lloyd's (NYSE: LYG). Credit Suisse likes domestically focused U.K. banks because they have the least sovereign CDS exposure of any national banking sector.
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