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.
The
Swiss
investment
bank
expects
Europe’s
growth
to
stabilize
at
0.6%
this
year,
a
conservative
estimate
compared
with
the
1.2%
growth
rate
penciled
by
the
International
Monetary
Fund.
“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.
They
estimate
that
the
benchmark
Stoxx
Europe
600
will
trade
between
420
and
520
this
year,
with
retail,
banks,
real
estate,
mining,
software,
semis
and
media
being
among
their
“favored
sectors.”
For
reference,
the
index
is
trading
at
around
472.86.
“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
.
“We
like
domestic
exposures
because
European
growth
has
already
slowed
but
is
forecast
to
stabilize
in
contrast
to
the
U.S.
and
China
where
growth
is
expected
to
slow,”
the
bank’s
analysts
said
in
explaining
why
they
like
the
companies.
The
investment
bank
also
named
its
top
buy-rated
names
with
“well-tested
tactical
signals
for
stocks
based
on
alpha
models
covering
the
macro
regime,
earnings,
valuation
and
sentiment.”
Here
are
10
of
them.
Software
plays
2023
was
a
strong
year
for
software,
and
UBS
is
bullish
about
the
sector’s
2024
outlook,
citing
a
Gartner
forecast
that
IT
spending
will
grow
by
8%
this
year,
up
from
3.5%
in
2023.
It
has
a
buy
rating
on
ASML
Holdings
,
SAP
,
Infineon
Holdings
and
Capgemini
,
giving
them
potential
returns
of
22%,
17%,
40%
and
10%,
respectively.
—
CNBC’s
Michael
Bloom
contributed
to
this
report.
