Stocks are rocking — soaring in January after a year of bear markets, then plunging last week. Investors are digesting US inflation numbers, watching consumer prices and anticipating the depth of a possible recession. As sentiment turned slightly bearish, BofA sought out cheaper global stocks that had proved resilient during the 2008 financial crisis. BofA strategist Paulina Strzelinska said in a Feb. 9 note that the 12-month price-to-earnings ratio for European equities is 11.9x — in line with the long-term average. European stocks are up 18% since the October market bottom, she said. But there are still cheap corners of the market, she added, naming consumer staples and utilities. Europe has been one of the brightest spots in the global stock market this year, with Wall Street currently calling the region a better bet than the US. BofA Screen BofA looked for European stocks that met the following criteria: Cheap compared to the average 12-month forward price-to-earnings multiple over the last 15 years. Positive earnings per share between 2007 and 2010. Less than the maximum market median drawdown during the financial crisis. The 17 stocks that appeared on the BofA screen were primarily from the healthcare, food and beverage, and utility sectors. Here are four of them: German pharmaceutical giant Bayer: Its stock, which is up around 23% year-to-date, soared to hit an eight-month high last week after former Roche executive Bill Anderson was announced as the new CEO. According to FactSet, analysts covering the stock gave it an average upside potential of around 23%, and 62% rated it a buy. British company British American Tobacco: The world’s largest tobacco company last week forecast a slight increase in earnings this year but dashed hopes of a share buyback. According to FactSet, analysts covering the stock gave it an average upside potential of around 26%, and 78% rated it a Buy. French utility Engie: The company, which has a renewable energy unit, has strong analyst support — 93% of those covering the stock gave it a buy rating. They also gave it a 28% upside potential. British pharmaceutical company GSK: Research firm Argus noted in a Feb. 10 announcement that GSK recently spun off its consumer health care business and will now focus on its pharmaceuticals business. “We believe the split will help GSK develop its pipeline and expect it to drive cash flow generation and stock price gains,” the company said, giving it a price target of $45 — or 25% potential upside. – CNBC’s Michael Bloom contributed to this report.
