S&P Capital IQ unveils 10 ‘Power Picks’ for 2013

Industrial, telecoms, automotive and luxury consumer goods are the sectors which will outperform the broader market, according to S&P Capital IQ Equity Research, which has revealed today its top ten core European investment selections of equity stocks, ‘Power Picks’, for 2013.

Power Picks for 2013 are: ASML, BNP Paribas, Carlsberg, Centrica, Essilor International, Julius Baer, Prudential, Rio Tinto, Sanofi and Telenor.

The team has analysed the key themes set to influence the performance of European equities over the next twelve months, and compiled a list of stocks it expects to outperform the broader market.

In 2012, the Power Picks list outperformed the DJ Stoxx 600 by 12.2%, on a total return basis in 2012.

S&P Capital IQ doesn’t expect the potential likelihood for consolidation in the coming weeks to mask the returning attractiveness of equities as an asset class.

According to the research, most of the visible risks for 2013 appear concentrated in the first quarter: the Spanish recession could accelerate lower, causing a subsequent disruption to peripheral spreads and European policy; Italian elections in February have the potential to undo the government’s pro-European progress over the past 18 months; and the US could impose austerity measures similar to those in Europe during the second round of fiscal debates in March.

In this context, S&P Capital IQ expects macro-dominated events of the past few years to subside and allow traditional stock pickers greater flexibility.

“We believe that the binary risk events of the past few years should dissipate as 2013 progresses. This will allow equities to re-rate to 2003-2007 levels, if growth recovers simultaneously,” said Robert Quinn, chief European equity strategist.

Analysts anticipate that fiscal tightening in 2013 will be of a similar level to 2012, but materially lower in 2014, providing a positive impulse.

Quinn added: “Moreover, we believe the European banking system should be on course to aid economic growth from the same 2014 timetable, after one final tough year of restraint in 2013.”

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