Goldman picks cheap global stocks to buy ahead of a summer surge

Published Tue, Apr 13 20211:47 AM EDT

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

Goldman Sachs is expecting a strong rebound in European stocks as Covid-19 vaccines are distributed, giving investors a chance to cash in on a region its analysts say is cheaper than the U.S. "Europe remains at a sharp discount to the U.S. market," analysts led by Sharon Bell said in a note Monday. "The Euro area will rebound sharply into the summer." In the note entitled "What to buy as Europe catches up," the analysts advised investors to go "long" on Goldman's Domestic Euro area basket of stocks, meaning they expect it to rise in value. Here are some of Goldman's top stock picks: Banks Goldman's banking picks in its basket of stocks include France's Credit Agricole , Germany's Commerzbank and Dutch company ABN Amro . "The sector has bounced; are banks already pricing recovery? We see more upside," Goldman's analysts stated. "Despite the strong rally since September last year, the sector remains on a 40% discount to the European market, compared to a 20-30% typical discount since the GFC (global financial crisis)." Travel and leisure French lottery operator La Francaise Des Jeux is Goldman's top pick in the sector. Travel and leisure stocks are set to benefit as Europe's economy reopens, the bank's analysts stated. Construction and materials As with banks and travel, the construction sector has high sensitivity to European growth, as well as high sales exposure to the region, according to Goldman. Its picks include French building firm Vinci and services company Bouygues . Energy and utilities Goldman named a slew of stocks in the sector including French firms EDF and Engie , Italian companies Hera and Italgas and Spain's Enagas . Telecommunications The bank also included a raft of telco firms from across Europe in its basket, such as Telecom Italia , Belgium firm Proximus and French company Iliad . Retail and grocery French grocer Carrefour and German e-commerce retailer Zalando are included in Goldman's basket. "The vaccination program in the E.U. has had a slow start versus programs in the U.S. and U.K.; case numbers have risen in several countries across Europe and lockdowns have been re-imposed in some countries too," Goldman's analysts stated. "Beyond the next few weeks, however, our economists expect a strong recovery in Europe; indeed, their confidence is rising that the Euro area will rebound sharply into the summer." They said they expect the bank's Domestic Euro area basket of stocks to be a beneficiary of this economic growth, as the economy reopens.

Shopping carts outside a Carrefour SA hypermarket in Avignon, France, on Friday, Jan. 15, 2021.

Bloomberg | Bloomberg | Getty Images

Goldman Sachs is expecting a strong rebound in European stocks as Covid-19 vaccines are distributed, giving investors a chance to cash in on a region its analysts say is cheaper than the U.S.

"Europe remains at a sharp discount to the U.S. market," analysts led by Sharon Bell said in a note Monday. "The Euro area will rebound sharply into the summer."

In the note entitled "What to buy as Europe catches up," the analysts advised investors to go "long" on Goldman's Domestic Euro area basket of stocks, meaning they expect it to rise in value.

Here are some of Goldman's top stock picks: