‘More than a trade’: Credit Suisse picks ‘cheap’ global stocks for long-term investment

Published Tue, May 25 20217:28 PM EDT

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

Exceptionally high levels of household savings, the Covid vaccine rollout and a "supportive" fiscal policy are set to benefit a raft of global stocks according to analysts from Credit Suisse. The investment bank put together several stock lists, including "cheap" stocks it expects to outperform and "global leaders" among so-called green stocks. Analysts led by Andrew Garthwaite last week said there were several "positives" for European stocks specifically, including above-average earnings revisions and the region's 750 billion euro ($917 billion) recovery fund. All of this combined means Europe could potentially be "more than a 'trade'" right now, and provide longer-term investment opportunities, according to Credit Suisse. The analysts' stock picks include: The bank chose several "European 'green' stocks that are global leaders," including energy tech firm Schneider Electric , cable and fiber company Nexans and Italian power firm Enel , all of which it gave an "outperform" rating. It also put rail firm Alstom , packaging company Smurfit Kappa Group and gas supplier Air Liquide on its list of likely outperformers. It also picked a list of stocks that are "outperform-rated and cheap," according to its HOLT methodology (proprietary analysis named after the last names of the bank's founders). These stocks include lock company Assa Abloy , Swedish heavy industry supplier Alfa Laval , Irish food firm Kerry Group and German chemicals firm Brenntag . The stock picks come as Credit Suisse upgraded Continental Europe to "overweight" from "benchmark" in a note dated May 20. The bank likes the region for its leadership in sustainability, as well as fiscal policy such as the E.U. recovery fund. The bank's analysts also cited a "rapidly improving vaccination picture" and "exceptionally high" household savings as reasons to invest in the region. It expects a "sustained reopening" as Europe and the U.K. continue with vaccination programs and highlighted S & P Global estimates that 1.5% to 4.1% could be added to GDP in the region over the next five years. Europe "ranks particularly well on earnings momentum" and is set to do well from macro-economic factors such as increasing bond yields and potential rising inflation, as well as higher global PMIs, the analysts said. The Purchasing Managers' Index, or PMI, is based on a survey of supply chain executives to understand manufacturing buying trends. "We would also expect composite PMI new orders to rise in Europe (as economies open up) relative to the US and that in turn helps Europe to outperform," they added. The bank also noted that Europe is "usually the best performing region" when bond yields rise – yields dipped slightly on Monday after hitting a high in mid-May .

A worker refuels a train powered by a hydrogen fuel cell in Salzgitter, Germany, in April 2021.

Krisztian Bocsi | Bloomberg | Getty Images

Exceptionally high levels of household savings, the Covid vaccine rollout and a "supportive" fiscal policy are set to benefit a raft of global stocks according to analysts from Credit Suisse.

The investment bank put together several stock lists, including "cheap" stocks it expects to outperform and "global leaders" among so-called green stocks.

Analysts led by Andrew Garthwaite last week said there were several "positives" for European stocks specifically, including above-average earnings revisions and the region's 750 billion euro ($917 billion) recovery fund.

All of this combined means Europe could potentially be "more than a 'trade'" right now, and provide longer-term investment opportunities, according to Credit Suisse.

The analysts' stock picks include: