Buy these European value stocks 'aggressively' during market dips, institutional investor says

Published Thu, Nov 12 20203:24 AM EST

Key Points

Alvine Capital's Stephen Isaacs believes European markets will remain "pretty choppy" in coming weeks.
However, he foresaw a "complete renaissance in value stocks."

With European markets expected to remain fairly volatile into the New Year, one institutional investor recommends using any dips to buy some "incredibly cheap" stocks. Stephen Isaacs, chairman of the investment committee at institutional advisory firm Alvine Capital, told CNBC's " Squawk Box Europe " on Wednesday that he expects containment measures to curb the spread of the coronavirus in Europe to remain in place for at least the remainder of 2020. As a result, he believes European markets will remain "pretty choppy" in the coming weeks. Europe's Stoxx 600 index has added nearly 14% since Oct. 30. The U.K.'s FTSE 100 has risen 14% and Germany's Dax index has gained 13%, while France's CAC 40 has surged by nearly 18%, according to Refinitiv data. "But I think any weakness, any opportunity, you want to buy into it aggressively," Isaacs said. He highlighted airline, hotel and energy stocks as "incredibly cheap." Part of this week's rally came off the back of Democrat Joe Biden's projected win in the U.S. election over the weekend. Global stock markets were boosted further on hopes of an effective coronavirus vaccine. Pfizer and BioNTech said Monday that early results showed their vaccine candidate was more than 90% effective in preventing the disease. This appeared to spark a rotation to cyclical value companies , which rely on an economic recovery, and away from growth technology stocks. Growth stocks are companies which are expected to show continued above-average market growth. Meanwhile, value stocks are businesses believed to be trading below their true value and will deliver higher returns when that value is realized by the market. Isaacs said this latest swing into value stocks was the biggest movement of its kind since 2001, when the dot-com bubble burst, which led to a "complete reappraisal" of investing in the following two to three years. Understanding consumer behavior over the next six to 12 months would be key, he said. Employment growth, or nonfarm payroll data from the U.S. last week and U.K. retail sales figures out Tuesday, showed consumers will spend "if given half the chance." "There is pent-up demand," Isaacs said, adding this trend had tied in with the vaccination story. Nevertheless, Isaacs believed it would still be a "bumpy road" for markets. He said he wasn't convinced the prospective vaccine was a "single silver bullet" to the coronavirus crisis but maintained there would be a "complete renaissance in value stocks." Subscribe to CNBC PRO to access live PRO Talks, including our Dec. 2 discussion on opportunities and risks in international markets.

European markets are keeping an eye on inflationary signs.

Andia | UIG | Getty Images

With European markets expected to remain fairly volatile into the New Year, one institutional investor recommends using any dips to buy some "incredibly cheap" stocks.

Stephen Isaacs, chairman of the investment committee at institutional advisory firm Alvine Capital, told CNBC's "Squawk Box Europe" on Wednesday that he expects containment measures to curb the spread of the coronavirus in Europe to remain in place for at least the remainder of 2020.

As a result, he believes European markets will remain "pretty choppy" in the coming weeks.