After Euro Zone Deal, What Stocks Are Attractive?

Following Thursday's much-anticipated euro zone deal, investors are looking again at stocks although a rally in Europe petered out at mid-day.

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Industrial companies and even the region's embattled banks, many of whom may have to recapitalize under the terms of the new deal, are worth returning to, according to Giles Keating, head of research at Credit Suisse.

"The more solid industrial companies which have been left behind may become the focus of people buying," he told CNBC Friday.

"Larger blue chips, solid German companies have been marked down throughout the year as the market feared the worst about the euro zone."

He believes that the German economy is performing "pretty well", despite recent slowing growth.

Industrial metals are also a good play, he added, citing evidence of stabilization in China.

Banking stocks in Europe gained 8.9 percent on Thursday following the news thatEuropean banks will have to meet new capital requirements.

"There's a clear road map and requirements for weaker banks to get themselves properly capitalized and that will improve things enormously," said Keating.

Big UK and US banks with a large international offering and strong dollar funding are likely to emerge stronger from the crisis, according to Citi equities analysts.

The winners are typically US and UK International banks," the analysts wrote in a note.

"The “winners” this time around are banks with strong dollar funding – two-thirds of international trade is priced and settled in US$, even more in Asia – in addition to the corporate client base, international network, IT platforms, relevant trade-related business skills and an appetite for credit risk."

There is still uncertainty over whether this week's events will spark a sustained rally in European stocks. Fears about a double dip recession have not been dismissed.

"I don't think the market is buying all of this," warned Simon Evenett, Professor of International Trade and Economic Development, University of St. Gallen.

"They have provided clarity for the banking system but look at what happened to Italian bonds yesterday."

Italy's bond auction on Friday saw the euro zone's third largest economy pay the most since joining the euro to sell new 10-year debt.

"I think there are definitely investors who will have been left behind, and the price action today will give us a clue," said Keating.

"For those who have been out of the market, they have got to take decisions over whether the rally is over, or whether they deploy some money."

Corporate credit and emerging markets were tipped by Philip Poole, Global Head of Macro and Investment Strategy at HSBC Global Asset Management, in a note.

"We favour corporate credit, in developed and emerging markets; selective emerging markets carry currencies where central banks are still committed to curbing inflation pressures, and emerging markets debt – all of which have cheapened to the point where we believe they offer entry points with long-term value. Emerging equity markets also offer value," he wrote.