Credit Suisse's names its top European stock picks

Credit Suisse published it latest list of top European investment ideas on Tuesday. Here’s a pick of one from each sector.

In the consumer space, CS highlighted Italian tyre manufacturer Pirelli, saying that from a fundamental perspective, the €15 share price and €0.367 dividend do not reflect the company’s medium-term potential, including a joint-venture for its industrial business.

Oil & gas services company Technip was one of the bank's picks in the energy sector. “Technip is the global leader in the manufacture and installation of high technology value-added flexible pipe, used in developing deep water oil and gas resources. This market is set to grow, with Petrobras as a major consumer, and Technip is very well placed to benefit,” said CS.

In terms of financials, CS pointed to Italy’s Intesa Sanpaolo. It said the relative valuation premium has widened in recent months and is mainly justified by superior profitability levels, an attractive dividend policy and superior solvency levels.

One of Credit Suisse’s picks in the healthcare sector was Swiss company Novartis. “Novartis is in a period of restructuring, building up its oncology business, exiting underperforming vaccines/ animal health businesses, and delivering on the Pharma pipeline,” said CS. It looks to the Novartis Business Services project as a way to constrain operating costs during this time of transition.

As far as industrials are concerned, it highlighted London-listed Ashtead. It believes the company will continue to build market share in the US equipment rental market from a combination of organic and bolt-on centre growth, as well as expanding at existing depots.

In materials, CS pointed to UK stock Wolseley.“Given the organic growth outlook, the ongoing margin improvements, the limited capex requirements, the discipline on M&A and the quality of management, we see Wolseley as being a highly cash generative company over the next five years,” said the bank.

France’s Dassault Systems was one of its technology picks. “Dassault's strong net cash position gives the company optionality to continue bolt-on MA& to keep EPS momentum positive. We think the shares continue to re-rate with likely EPS upgrades.”
One of its top picks in telecommunications services was BT Group. Upside from the EE deal and lower than previously forecast TV content costs more than offset the negative impact of Virgin Media’s 4m footprint expansion and uncertainty over a possible Labour government driving lower forecast fixed price rises, said CS.

Finally, among utilities, the bank highlighted Spanish company Iberdrola, pointing to a superior dividend policy and higher growth prospects versus the sector.