European
markets
have
largely
had
a
good
run
this
year
—
with
several
market
watchers
looking
keenly
at
the
region
and
saying
that
it
could
have
a
”
greater
tailwind
than
the
U.S.
”
Europe’s
Stoxx
600
dipped
in
the
last
few
days,
but
had
been
climbing
since
the
start
of
the
year.
The
benchmark
is
up
by
10.8%
year-to-date
and
16.3%
in
the
past
year.
Those
searching
for
pockets
of
opportunities
in
the
region
can
look
to
Goldman
Sachs’
selection
of
“alpha”
stock
opportunities.
Alpha
stocks
refer
to
those
with
the
ability
to
beat
the
market.
“Our
macro
team
expects
solid
growth
and
monetary
policy
easing
into
2H24.
While
the
YTD
[year-to-date]
rally
in
equities
suggests
some
of
this
optimism
is
already
priced,
with
market
correlation
at
a
5-year
low,
we
continue
to
see
potential
for
alpha
opportunities,”
the
investment
bank’s
analysts
wrote
in
a
May
23
research
note.
Goldman
Sachs’
list
of
opportunities
include
stocks
with
“deep
value”
and
“defensive
growth”
characteristics.
Here
are
five
of
them.
‘Inexpensive
names’
Among
the
stocks
with
“deep
value”
Goldman
Sachs
likes
are
British
sports
fashion
retailer
JD
Sports
Fashion
,
airline
holding
company
International
Consolidated
Airlines
Group
(IAG)
and
Danish
facility
management
company
ISS
.
Those
stocks,
the
bank
added,
are
“inexpensive
names
with
upside
vs.
consensus.”
JD:
Goldman
sees
the
stock
offering
a
“compelling
valuation”
of
nine
times
2024
price-to-earnings,
on
the
back
of
attractive
earnings
growth.
That,
the
bank
said,
is
thanks
to
“robust
top-line
trends
and
stable
gross
margin
dynamics.”
The
company’s
shares
are
traded
in
the
First
Trust
United
Kingdom
AlphaDEX
Fund
(1.2%
weight)
and
Goldman
Sachs
ActiveBeta
Europe
Equity
ETF
(0.3%).
IAG:
The
company
is
able
to
“sustain
higher
margins”
through
the
ongoing
market
cycle
thanks
to
its
strong
market
position
in
“relatively
more
consolidated
markets,”
Goldman
noted.
This
would
translate
to
better
“free-cash-flow
generation
driving
deleveraging
and
attractive
shareholder
returns,”
the
bank’s
analysts
added.
Shares
in
IAG
have
a
1.2%
weight
in
the
U.S.
Global
Jets
ETF
.
ISS:
Goldman
said
the
company
has
a
“path
to
re-rating”
over
the
next
12
months,
possibly
on
the
back
of
expectations
beating
organic
growth
and
margins
this
year.
The
bank’s
analysts
have
penciled
an
8%
return
of
its
market
cap
to
shareholders
this
year
“with
potential
for
material
buybacks
beyond
this
year.”
ISS’
shares
are
traded
in
the
iShares
MSCI
Europe
Small-Cap
ETF
with
a
weight
of
0.2%.
‘Strong
top-line
prospects’
Growth
stocks
the
Wall
Street
bank
is
bullish
on
include
those
“with
strong
top-line
prospects
at
reasonable
growth-adjusted
valuations.”
On
its
list
are
Dutch
payments
company
Adyen
and
semiconductor
player
ASML
,
both
of
which
are
in
Goldman’s
conviction
list.
Adyen:
Goldman
sees
the
stock
as
a
“clear
market
leader
in
high
functionality,
full-stack,
global
multi-channel
offers
with
its
single
fully
integrated
platform.”
The
bank’s
analysts
added
that
Adyen’s
“growth-adjusted
valuation
[is]
reasonable
and
argues
that
the
share
price
weakness
post
1Q24
offers
an
attractive
entry-point.”
ASML:
Goldman
said
the
company
has
a
“multi-decade
competitive
moat
in
High
NA,
which
will
be
extremely
difficult
to
replicate
for
the
next
10-20
years
at
least.”
Both
Adyen
and
ASML
are
traded
on
Euronext
Amsterdam.
Adyen
is
also
traded
in
the
U.S.
as
an
American
depositary
receipt
as
ADYYF,
while
ASML
has
a
secondary
listing
on
Nasdaq.
—
CNBC’s
Michael
Bloom
contributed
to
this
report.
