Citi advises clients to buy the dip in stock market volatility. Analysts from JPMorgan and Bank of America have identified global sectors and stocks that are close to bottom. BofA’s screen of week was a European listing of “High-Quality stocks that have devalued most this year”, which it published in a May 25 research note. In our Screen of the Week we focus on High Quality stocks which have derated higher than the market YTD [year to date]However, they have higher earnings support than the sector average FCF and stronger earnings support [free cashflow],” analyst Paulina Strzelinska said. Top of the bank’s list — ranked in order of quality — was Swiss industrials company Kuehne Nagel , followed by Danish jewelry brand Pandora and Italian health care company DiaSorin . Maersk Shipping, British-American heating company Ferguson and automobilemaker Stellantis came in second, then luxury clothing brand Moncler, IT consultancy Reply, and Taylor Wimpey as housebuilders. Strzelinska said that high quality stocks saw the biggest drop in value compared to other styles. The premium fell to its lowest point in four years. JPMorgan’s potential opportunities JPMorgan stated that the retail sector could have hit bottom. According to JPMorgan analysts, “Retailers saw consumer confidence drop but that could mean the worst,” a research note from May 23 stated. Target’s shares fell sharply after falling short of analysts’ expectations on May 18, while Walmart failed to meet earnings expectations.[Retail]Mislav Matejka’s analysts wrote, “has already performed poorly and some high-profile profit warnings were now moving behind us.” Continue reading Citi bear market model suggests it might be time for you to invest in the dip. Based on strong charts of five companies, Kyle Bass of Bank of America revealed 5 stocks that are likely to be the top picks. He said the U.S. would be facing a recession next year. Food and oil prices have been rising, so “Unless there are further price shocks we believe one could look at the retail names from here.” Retail names on the bank’s list of top European picks included Marks and Spencer and Swedish clothing company H & M , both of which JPMorgan rated neutral. It also included Portuguese grocery chain Jeronimo Martins, which the bank rated as overweight. Bank also stated that consumer spending was likely to remain “relatively resilient.” The analysts stated, “Outside of the potential offsets for the difficult consumer outlook, we emphasize the robust labour market and where the increasing wages are coming through.” Citi: “Buy This Dip” Citi stated that it was possible to buy stocks again, in a May 26 Research Note titled “Bear Market Checklist. Buy This Dip”. The bank analyzed 18 indicators — that could become “red flags” — such as company fundamentals, equity valuation and financing activity as part of its Bear Market Checklist, or BMC. Robert Buckland, an analyst, stated that while some indicators could be warning signs at any given time, they are not often enough to indicate that the market is turning bearish long-term. Citi didn’t pick stocks, but stated it prefers Europe and emerging markets because there are fewer red flags than the U.S. at present. Similar to the US however, US valuations did not seem particularly long. Only 4.5/18 red alerts are now being issued by the European BMC. Although the EM BMC uses different factors, the story is the same as Europe. The bank suggested that investors who are concerned about taking a plunge on the US markets might consider buying dips in Europe or EM. The BMC wasn’t intended as a tool to forecast the timing of corrections. It was instead designed to encourage action in the event of inevitable dips,” the bank said. This report was contributed by Fred Imbert, CNBC.
An image of a Wall Street sign at New York Stock exchange (NYSE), New York, March 9, 2020.
Carlo Allegri | Reuters
Citi advises clients that they should be aware of recent volatility in stock market markets.buy this dip“While analysts from Bank of America JPMorganHave identified global stocks or sectors they feel are close to a bottom.
