Bank of America loves these 10 unloved global stocks with major upside

Published Sun, May 14 20239:12 PM EDT

Bank of America strategists have named the ten European stocks they believe are currently undervalued and could provide significant investment returns. These picks, which the investment bank refers to as the "Beat Factor Top 10," are primarily made up of industrial and financial companies. The industrial companies Airbus , Thales , BAE Systems , and Safran are among the top picks. Airbus stands out as Bank of America's analyst price target for the company is 46% higher than the consensus forecast. Their estimates for Airbus' earnings per share (EPS) for 2023 and 2024 are also 8% higher than the consensus estimates. Bank of America analysts expect shares of Airbus to rise by 64% to 200 euros per share ($217) over the next 12 months. AIR-FR 1Y line The bank's price target for Safran is nearly 30% above consensus, and it's around 10% higher than consensus for Thales and BAE systems, the strategists led by Milla Savova said in their note to clients on May 11. The "Beat Factor" is a measure Bank of America analysts use to identify the most divergent stock ideas on the FTSE Eurofirst 300. It is a quantitative approach, relying on price targets and earnings estimates, rather than a qualitative approach, which looks at balance sheets and income statements. Airbus is also a " top 10 best ideas " stock pick at Bank of America for the second quarter. The bank's analysts have previously said they like the company for several reasons, including improvements in the supply of airplane parts, increased demand for large planes, and the post-pandemic reopening of China. Financials, luxury goods and more In the financial sector, BNP Paribas and Credit Agricole made Bank of America's "Beat Factor Top 10" list. BNP Paribas emerged as the company with the highest Beat Factor score. The analysts' price target for BNP Paribas is 22% above the average prediction, and they estimate that its EPS for 2023 will be 28% higher than the consensus. However, as of late April, the Paris-headquartered bank was also the most shorted among European banking stocks . The remaining companies on the top 10 list are a diverse bunch. They include luxury goods group Louis Vuitton Moët Hennessy , electricity utility company Verbund , aluminum producer Norsk Hydro , and cosmetics company L'Oreal . LVMH shares hit a record high following its quarterly results and are up nearly 30% this year. Despite the share price gains, Bank of America strategists remain bullish on the stock coming out of the earnings season. — CNBC's Michael Bloom contributed reporting.