Stocks in weaker euro zone countries like Spain and Italy look set to outperform their stronger peers this year and next, analysts say.
Stock markets in the euro zone's peripheral countries of Portugal, Spain, Italy, Ireland, Cyprus and Greece have performed strongly in 2013, boosted by waning fears of a euro zone breakup and the ultra-loose monetary policy of the European Central Bank.
(Read more: Inflation will rise but risks remain: ECB official)
Banks forecast further strong gains, thanks to improving growth prospects, better current account balances and the diminishing risk that there could be further sovereign defaults.
Credit Suisse, which was overweight both Italy and Ireland, said the narrowing economic growth gap between weaker and "core" European countries implied a 20 percent outperformance of peripheral equities into 2014.
(Read more: Peripheral bonds: How to play Europe's recovery)
It noted that the gap between year-on-year real economic growth in core countries, France and Germany, and peripheral countries, Spain and Italy, stood at 2.4 percentage points in the second quarter of 2013, but was set to narrow to 0.9 percentage points by the end of 2014.
"Within a European portfolio, we believe investors should be overweight peripheral Europe," said the Swiss bank, in a report detailing its global cross-asset strategy on Tuesday.