U.S. stocks aren’t the only ones soaring this year. Some global indexes have followed those gains and climbed: The MSCI World index is up 14% in the year to date; Japan’s benchmark index Nikkei 225 jumped nearly 31% in the year to date — more than the S & P 500’s 16%; the Stoxx Europe 600 is up 12%; and Germany’s Dax index is up 17% in the same period. Analysts are still optimistic about some parts of the U.S. market, but some expect international markets to do better this year. Morgan Stanley, in its recent mid-year outlook report, urged investors to “play offense” in Asian stocks. “[We’re overweight] Japan and [emerging market] equities as better growth, lower inflation, easier policy, and reasonable valuations drive double-digit 12-month returns. US stocks lag as 2H23 earnings disappoint,” the bank wrote. J.P. Morgan Asset Management’s chief market strategist for Asia-Pacific, Tai Hui, wrote in a Thursday note: “For equities, we suggest greater international diversification in developed markets given varying phases of economic growth and monetary policy cycle. Markets like Japan [are] enjoying some structural tailwinds.” But investors shouldn’t abandon all U.S. stocks just yet. “Investors should still focus more on quality companies in the U.S. who would be more resilient in a weaker growth environment, long duration growth stocks could also benefit from lower yields in coming months,” Tai added. Some analysts are expecting artificial intelligence to give U.S. stocks a boost. “The A.I. demand is astonishing and can continue to be a place where demand finds a home. I am participating in individual names within this sector, but not adding to those positions at this point,” Raymond Bridges, managing director of investment management firm Bridges Capital, told CNBC Pro. Stock screen CNBC Pro screened for stocks in the MSCI World, S & P 500 and the Vanguard FTSE All-World ex-U.S. Index Fund. The resulting stocks have buy ratings from over 65% of analysts covering them, and average price target upside of at least 30%. Two stocks stood out for their 100% buy rating from analysts and significant potential upside: Coal mining company Yancoal Australia and Hong Kong-listed ESR Group , a real estate services company. Japanese stocks Kansai Electric Power and JCR Pharmaceuticals made the cut, both with more than 70% buy rating. German meal kit company Hello Fresh got the highest potential upside from analysts at 82%. U.S. stocks include e-commerce giant MercadoLibre , health insurance firm Humana and pharmaceutical firm Jazz Pharmaceuticals .
