Europe is set for a "weak stagnation" that will dampen the market, but several sectors and stocks stand out to UBS as good plays this year as growth stabilizes and inflation slows.
"Our macro outlook for Europe is for a weak stagnation that takes European equities modestly lower but delivers another year of actionable divergences between sectors and stocks," UBS analysts led by Gerry Fowler wrote in a Jan. 19 note.
"In 2024, we think the factors that will perform are domestic (smaller companies), quality and growth," the analysts wrote, adding that slower growth and lower yields should reduce the headwinds for the valuations of growth stocks.
'Well-positioned, domestic, quality, growth companies' "Well-positioned, domestic, quality, growth companies" that UBS has given buy ratings include Spanish clothing company Industria de Diseno Textil, British bakery chain Greggs and online real estate platform Rightmove as well as French construction player Vinci .
It has a buy rating on ASML Holdings , SAP , Infineon Holdings and Capgemini , giving them potential returns of 22%, 17%, 40% and 10%, respectively.
Persons:
Gerry Fowler, Vinci, — CNBC's Michael Bloom
Organizations:
UBS, International Monetary Fund, Industria de Diseno Textil, Software, Gartner, ASML Holdings, SAP, Infineon Holdings
Locations:
Swiss, Europe, Spanish, China