Goldman Sachs has refreshed its conviction list of top picks in Europe and recommended investors consider a specific trading strategy given uncertainty over how much further markets can rise. Despite logging a lackluster performance last week , the pan-European Stoxx 600 index is around 6.55% higher year-to-date and up some 14.6% over the last 12 months. However, Goldman Sachs’ analysts noted that investors are “questioning how much upside is left.” They recommend a “barbell approach” to trading European equities, as investors are “facing a flatter trajectory for equity markets over the next few years.” This strategy involves being overweight on distinct groups of stocks to hedge against market uncertainty. “[An approach] favoring defensive, strong balance sheet growth companies that are re-investing and able to compound superior earnings’ growth, as well as mature companies that are cash-generative and able to buyback shares and pay dividends, and smaller cap companies with lower valuations,” they wrote in an April. 2 note. For those looking for stock ideas, here are two of the latest additions to Goldman Sachs’ European conviction list: Unibail-Rodamco-Westfield Goldman analyst Jonathan Kownator struck a bullish tone on French commercial real estate giant Unibail-Rodamco-Westfield . “A constructive outlook on the European consumer, alongside decelerating online penetration, should drive higher store footfall, boding well for retail landlords,” he said. Unibail’s real estate portfolio spans France, Spain, Germany, the United Kingdom and more in Europe, as well as the United States. Retail accounts for around 92% of its portfolio, Kownator said, and a majority of these premises are occupied by stores with “significantly higher-than-average sales density in wealthier catchment areas.” “The improving demand for retail supports stronger operating trends in occupancy and rental growth,” he added. Goldman Sachs has a 12-month price target of 107 euros ($115.97) on the stock, giving it potential upside of around 46.8%. JCDecaux Another addition to Goldman’s conviction list is French advertising firm JCDecaux , a company known for its bus stop ads, billboards and street furniture. Analyst Lisa Yang expects the company to see organic growth of 9.2% in 2024 — above consensus — on the back of major sporting events this summer including the UEFA soccer championships and Paris Olympics. “[Yang’s] analysis of the London 2012 Olympics shows significant out-of-home (OOH) share gain within broader UK ad spend, which she expects to play out in Paris and benefit JCD disproportionately given it holds c.50% OOH market share in France,” Goldman Sachs said in the note. “The European football championships in Germany should provide an additional boost with JCD commanding c.35% market share and its presence in Street Furniture in major cities.” Other opportunities Yang sees ahead include a recovery in international passengers to China which should boost its transport division. Goldman gives the stock a price target of 25.90 euros, implying potential upside of around 41.8%. — CNBC’s Michael Bloom contributed to this report.
Goldman Sachs reveals new ‘conviction list’ stocks for Europe
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