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JPMorgan has named a raft of European stocks it described as having high yields, strong balance sheets and safe dividends, such as BT Group , Bayer and Sainsbury’s . In a July 3 note detailing its outlook for the second half of the year, analysts led by Mislav Matejka stated: “Our pecking order for 2H is: bullish on Staples, Utilities, Telecoms and Healthcare, European Energy could hold up well.” The bank said international markets had outperformed the U.S., adding that it sees a “significant valuation discount in International vs US stocks.” Its European Sustainable yield basket — made up of 40 “high- and sustainable-yielding European stocks, with safe dividends and strong balance sheets” — include stocks across the bank’s preferred sectors. As well as Bayer, JPMorgan’s picks in healthcare include Swiss drug company Novartis and French pharmaceuticals company Sanofi . Utility companies in the basket include Italian company Enel and Finnish firm Fortum . Alongside J Sainsbury, it named Norwegian seafood company Mowi as a staples pick. In energy, the bank likes French oil company TotalEnergies , while in telecoms it chose Spanish firm Telefonica , and Swedish company Telia as well as BT Group. The bank conceded that the economic picture for the rest of 2023 is likely to be mixed. “The cushion of consumer excess savings is being eroded, profit margins are peaking and money supply in the US and Europe keeps contracting. Banks are tightening lending standards and the cost of financing continues to rise,” its note said. JPMorgan also chose a number of “cheap” global sectors it expects to outperform, including telecoms, energy and staples. – CNBC’s Michael Bloom contributed to this report.
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