JPMorgan picks global 'growth bargains' from energy to tech

Published Mon, Aug 9 202111:00 PM EDT

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

Analysts at JPMorgan have picked dozens of global stocks they are calling "Growth Bargains" in sectors ranging from technology to media and energy. They said 2021 "remains a stockpicker's paradise with many stocks still offering big upside." "There are reasons to be on our toes in Aug/Sep," JPMorgan's analysts wrote in an Aug. 5 research note. "July came in below expectations on some macro metrics but within a landscape that still suggests 2021 will be a year of strong real GDP growth and rising inflation which should help corporate margins recover from last year's 15-year lows," they added. "As we head into Aug, we continue to exercise some caution given our view that activity levels could disappoint due to the restrictions that several countries have applied as a result of the recent spike in new COVID-19 cases," the analysts stated. "We continue to see 2021 being a stockpicker's year… some stocks look overvalued, while others still offer plenty of upside!" they said. The bank launched its "Growth Bargains" screen, focusing on stocks that provide growth at a reasonable price, (which JPMorgan terms GARP) and all of its picks have had positive earnings before interest, taxes, depreciation and amortization (EBITDA) for at least 10 of the past 12 years. The stocks also have a trailing price-to-earnings (P/E) ratio of at least a 20% discount to their regional industry average, a measure analysts use to identify potential bargains in the market. All picks are small to mid-sized firms. Here's a selection of JPMorgan's bargain stocks, all of which are on its shortlist of "high-conviction" ideas and are rated overweight. British energy firm Centrica , which JPMorgan called "cheap despite many pos [positive] drivers," including new management, a reinstatement of dividend payments and benefiting from rising commodity prices. Oil, gas and marketing firm DCC is trading at a discount to the rest of the small to mid-sized market, according to the bank. Auto wholesaler Inchcape has "good" free cashflow yield and a "compelling theme" as JPMorgan expects car sales to increase as the economy recovers. The stock is trading at a "big discount" to the rest of the market, the analysts said. Steel firm Acerinox has its strongest balance sheet "in recent history" the analysts said, and they also like its "consistent" free cashflow generation and exposure to the U.S. economic recovery plan. French homewares firm Maisons du Monde is "down big from highs and trading at big discount," according to JPMorgan. The company is also benefiting from a focus on home improvement during the pandemic, the bank said. Cloud computing firm SoftwareOne has a "solid balance sheet" and below-average valuation, the analysts wrote. Taiwanese battery-maker Simplo Technology has "undemanding" valuations, "despite [a] solid growth story," as well as a rising dividend yield and "attractive" growth areas such as electric bikes, the bank said. Indonesian media company Media Nusantara Citra has a "very solid balance sheet," as well as "solid" fundamentals such as growth in digital advertising and a record high market share, according to the analysts.

Sign for J.P. Morgan on 7th March 2020 in London, United Kingdom. JPMorgan Chase & Co. is an American multinational investment bank and financial services holding company headquartered in New York.

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