Unloved and overlooked: European stocks to power through the downturn

Software, chemicals and industrial suppliers are among the under-appreciated European stocks that can survive the worst of the slowdown, explains Swiss & Global's Can Elbi.

Europe’s recovery has lagged that of the US, with earnings still 35% below their 2007 peak. The catch-up potential is significant. European companies generate 45%-50% of their revenues domestically, and sustainable economic growth in the region, even at a rate of 1%-1.5% per annum, could mean European equities deliver 30%-40% cumulative earnings growth over the next three years. This would mean a return to the 2008 peak by 2016. Draghi’s decisive action is helping to ensure the sustainability of the recovery. The recent ECB decision to cut interest rates and launch an asset purchase prog...