Few would have anticipated the steep losses in stock markets this year, after such a solid 2021. But the first half of 2022 has turned out to be something of a nightmare for many investors The MSCI World had its worst start to the year on record, while the S & P 500 ended the first six months with its worst performance since 1970. As the second half gets underway, Ned Davis Research has said a “long overdue” small relief bounce could be on the cards. Either way, market watchers are expecting continued volatility ahead as recession fears mount and earnings come under pressure. Despite this, analysts remain bullish on selective global stocks — and these could provide opportunities for investors. How we screen To identify these stocks, CNBC Pro used FactSet data to screen for MSCI World stocks that were beaten down in the first half of the year, but which analysts think are ripe for a rebound. These stocks recorded share price declines of more than 20% in the first six months of the year but remain buy-rated by the majority of analysts, with average potential upside of at least 20% based on consensus price targets, according to FactSet data. The list is then further narrowed by screening for stocks that are expected to grow their earnings per share by at least 20% this year. Corporate earnings have come into sharp focus ahead of the second quarter earnings season, with market watchers anticipating further stock pullbacks as companies report lower earnings and guidance. Jim Coulter, founding partner and executive chairman of private equity firm TPG, told CNBC that he believes earnings season will mark the “second chapter” of the market downturn, as inflation courses through supply chains and hit results across many sectors. Stocks that made the screen A raft of semiconductor stocks made the screen. One of the standout performers of 2021, the sector has seen a sharp reversal of fortunes this year. The iShares Semiconductor ETF (SOXX) is down nearly 40% year-to-date, significantly underperforming the major averages. Concerns are rising that the semiconductor sector is heading toward a downcycle amid an inventory glut and slowing sales of PCs and smartphones, as soaring inflation force consumers to tighten their belts. Several chip giants showed up on CNBC Pro’s screen, including Nvidia , Advanced Micro Devices , ASML and Broadcom . Nvidia lost a whopping 48.2% of its market value in the first six months of the year — and analysts do not expect a full recovery of its share price, giving the stock an average potential upside of 38.5%. The company is expected to grow its earnings per share by 36.5% this year. Just one chip stock on the screen has potential upside that’s higher that its decline this year. Shares in Arizona-based ON Semiconductor are down 29.1% this year, but analysts think the stock has potential upside of 64.1%. A number of financial stocks made the screen too. They include private equity firms Blackstone and Carlyle , as well as several banks such as Societe Generale , Macquarie and UniCredit . Investors have been weighing the growing risks of a recession for financials, with potential gains in margins from higher borrowing costs as interest rate rise. Bank stocks generally do well in a rising interest rate environment as they typically earn higher net interest income, but a recession could lead to less borrowing and potentially higher defaults. Read more Wall Street banks name their top global stocks for the second half — and give three over 70% upside Asset manager says the S & P 500 is primed for a rally — and reveals his top stock picks Recession playbook: Here are some of Wall street’s top stock picks for a downturn Electric vehicle maker Tesla also turned up on CNBC Pro’s screen. The EV giant has seen its share price slump more than 41% this year, hit by, among other things, looming job cuts, uncertainty over CEO Elon Musk’s Twitter deal, and his latest comments about new factories in Germany and Texas losing “billions of dollars .” The Texas-based automaker also had a disappointing second quarter, as it delivered 17.9% fewer electric vehicles compared to the previous quarter, as China’s Covid-19-related shutdown disrupted its production and supply chain. But the world’s largest EV maker could see a huge improvement in EPS this year, with estimated EPS growth of 169.1%, according to the Factset data. Other stocks that made the screen include industrial stocks Airbus and Danish shipping firm A.P. Moller , German medical device company Siemens Healthineers , Swiss specialty chemicals firm Sika , steel manufacturer ArcelorMittal and French consulting firm Capgemini .
