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Time to take profits on shares (page 3 of 3)
- Tuesday, January 06 - 2004 at 09:22
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As Germany posted the biggest rebound on a country level, on a stock basis, companies, which got beaten down during the last two years managed to post the biggest gains. Companies such as Alcatel (CGE FP; EUR 10.5), Ericsson (ERICB SS; SEK 13.1), ASML (ASML NA; EUR 16.34), ABB (ABBN VX; CHF 6.27), Commerzbank (CBK GY; EUR 15.84) and Swiss Life (SLHN VX; CHF 227) all posted a performance of over 100% for the full year.
Although we expect the current momentum to continue for at least the first couple of weeks, which will favour cyclical sectors and companies, we believe it would be prudent to shift focus from the high beta leaders over the past year into some of the lagging old economy type sectors and stocks.
For example, we remain bullish from a structural point of view for the energy sector, which is characterised by supply shortages, swelling Asian demand and geopolitical factors threatening supply disruptions. Our favourites Total (FP FP; EUR 148.7) and Eni (ENI IM; EUR 15.394) come also with an attractive dividend yield.
We would also point out telecom as a forgotten sector. Vodafone (VOD LN; GBP 1.3975) continues to gain marketshare and France Telecom (FTE FP; EUR 22.99) represents a combination of further cost-cutting potential, above sector average top-line growth, strong asset position (Orange), relatively benign domestic operating environment and strong commitment from management to use cash flow to increase distribution to shareholders.
Valuations in Europe look reasonable in absolute terms with a PER04 of 13x and good value in relative terms against government bonds, corporate bonds and cash. Consensus estimates for earnings growth are for around 14%.
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Credit Suisse, Private BankingTuesday, January 06 - 2004 at 09:22 UAE local time (GMT+4)
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This article was updated on Sat May 26 2007.
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This report does not constitute a prospectus and is not intended to provide the sole basis for any evaluation of the securities discussed herein. All estimates and opinions included in this report constitute our judgement as of the date of the report and may be subject to change without notice. Credit Suisse, Singapore Branch or its affiliates may, to the extent permitted by law, have used the information herein contained, or the research or analysis upon which it is based, before its publication.
Prices of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. There is an inherent risk that losses may be incurred rather than profits made because of buying and selling securities. Past performance is not a guarantee of future results. Investors should make their own appraisal of the risks and should consult to the extent necessary their own legal, financial, tax, accounting and other professional advisors, to ensure that any decision made is suitable with regards to their circumstances and financial position.
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