Bank of America has named multiple European “top stocks” it says are of “good value, low risk” and “high quality.” All of them turned up on “recession screens” for July, in a market BofA described as a being in a recession style cycle. A style cycle refers to the relationship between economic cycles and investment styles, the bank said in a research note dated July 19. The euro zone entered recession in the first quarter of the year, according to economic data released last month. Companies listed on BofA’s screen were from the largest 250 European stocks and from a range of sectors. Here are some of the names. In pharmaceuticals, BofA listed Swiss firms Roche and Novartis , French company Sanofi and British multinational GSK . Also on the list are automakers Volvo , Mercedes-Benz and Ferrari . Energy companies the bank named include Shell , German company EON and Italian firm Enel . As for consumer goods, it picked Unilever and Lysol-maker Reckitt Benckiser . Luxury conglomerate LVMH also made the bank’s list, as did Hermes . In addition, BofA named small and mid-sized companies with a market capitalization of less than 10 billion euros ($11.1 billion), including British retailer Next , drug company Hikma Pharmaceuticals , used car website Auto Trader and home improvement firm Howden Joinery . “A concerning sign is the 26 companies already profit-warning for the Q2 ’23 season, exceeding the 24 in previous quarter and compared with the historical average of 49 recorded in the ‘Recession’ phase,” the analysts stated. During recession cycles, investors have benefited from being overweight on value stocks rather than growth stocks, as well as on stocks with strong balance sheets and lower risk, BofA added, citing research based on a testing period between 1992 and 2003. — CNBC’s Michael Bloom contributed to this report.
