Analysts at Morgan Stanley have identified several global stock picks that they say are trading at prices significantly lower than their 12-month highs. The bank, in a research note dated June 27, listed stocks where the size of the current drawdown — or percentage off their highs — is “significant in a historical context” when compared to previous corrections from 12-month price peaks. Its list includes several overweight-rated European stocks, such as Just Eat Takeaway.com . The company — which operates in the highly competitive food delivery sector — saw its shares fall sharply on Wednesday as Berenberg analysts said they doubted whether the company would be able to sell U.S. food ordering firm Grubhub, per a Reuters report . The bank also picked Ferrari as an overweight stock — in June, the Italian carmaker said 80% of its sales would be electric and hybrid models by 2030 — and Morgan Stanley also chose car sales website Auto Trader . Irish-founded food manufacturer Kerry Group is also a pick for the bank, as well as eyewear giant EssilorLuxottica and Danish wind farm group Orsted . Morgan Stanley’s overweight U.K. picks include marketing group S4 Capital , delivery software firm Ocado , and certification company Intertek . The bank said it is “cautious” on European stocks right now but hopes to turn positive during the second half of the year. “History suggests that the right time to do that will be dictated by the path of earnings revisions — our analysis suggests that equities tend to bottom 2-3 weeks before revisions trough,” the analysts stated. The MSCI Europe index is down around 16% year-to-date. Morgan Stanley is not forecasting a recession, but it thinks the market will price for one in the coming months. “Retailing is the only sector where the current drawdown is larger than that normally seen during recessions. Other sectors closest to this benchmark are Medtech, Food Retail, Household & Personal Products, Real Estate, Software and Food, Bev & Tobacco,” the analysts said. — CNBC’s Anmar Frangoul contributed to this report.
A screen displays the trading information for Morgan Stanley on the floor of the New York Stock Exchange (NYSE), January 19, 2022.
Brendan McDermid | Reuters