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"JPMorgan Reveals Affordable Global Sectors Poised for Outperformance: Unveiling its Top Stock Picks"

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Global Sectors with Cheap Valuations, Overweight Ratings

European Telecoms: A Cheap and Overlooked Sector

According to JPMorgan, European telecoms are currently trading on the cheap side and are underowned. The bank sees this as an opportunity for investors, as telecoms companies have significantly improved their balance sheets in recent years. With a close to 13% free cash flow yield, the telecoms sector offers great value compared to the overall market. JPMorgan's European "value" basket includes telecoms companies like Vodafone and Nokia, while its "growth" basket includes Dutch firm KPN.

Cheap Valuations in the Energy Sector

JPMorgan is also overweight in the energy sector, as it believes there are currently cheap valuations in this industry. European energy companies continue to trade at a discount to oil prices. Stocks like Repsol, Siemens Energy, Neste, and Equinor are included in JPMorgan's European energy baskets.

Consumer Staples: Rebound Opportunity with Cheaper Valuations

JPMorgan expects consumer staples to rebound, given their cheaper valuations and potentially better margins outlook in the second half of the year. The bank is overweight in the sector. Stocks like British grocer Tesco and Swiss chocolate company Lindt & Spruengli are part of JPMorgan's European value basket for consumer staples.

The UK: Record Cheap and Overweight

JPMorgan describes the UK as "record cheap" following the Brexit vote in 2016. The country is trading near the lowest forward price to equity ratio compared to global peers in the last three decades. Even if banks and energy are excluded from the calculation, the UK still appears extremely undervalued. JPMorgan is overweight on the UK and includes stocks like WPP, Diageo, GSK, Smith & Nephew, Prudential, and Standard Chartered in its JPM UK Exporters and financial sector baskets.

Conclusion: Exploiting Cheap Valuations and Overweight Ratings for New Businesses

The current market conditions present a unique opportunity for new businesses to capitalize on sectors with cheap valuations and overweight ratings identified by JPMorgan. By aligning their strategies with these sectors, entrepreneurs can position themselves for potential growth and success.

European telecoms emerge as an attractive and overlooked sector, offering significant value compared to the overall market. Companies like Vodafone, Nokia, and KPN present potential investment opportunities for new businesses seeking to tap into the telecom industry's improved financial stability.

Additionally, the energy sector showcases cheap valuations, particularly in European energy companies that continue to trade at a discount to oil prices. Entrepreneurs exploring avenues in the energy industry should consider companies like Repsol, Siemens Energy, Neste, and Equinor, which feature in JPMorgan's European energy baskets.

For new businesses focusing on consumer staples, JPMorgan's overweight rating on this sector suggests a rebound opportunity. With cheaper valuations and the potential for improved margins in the coming months, companies such as Tesco and Lindt & Spruengli offer promising prospects for entrepreneurs venturing into the consumer staples market.

Furthermore, the UK economy stands out as "record cheap" following the Brexit vote in 2016. Even excluding banks and energy, the country appears significantly undervalued. For new businesses interested in the UK market, stocks like WPP, Diageo, GSK, Smith & Nephew, Prudential, and Standard Chartered represent potential opportunities within JPMorgan's UK Exporters and financial sector baskets.

In conclusion, the cheap valuations and overweight ratings across these global sectors provide an advantageous landscape for new businesses. By strategically positioning themselves within these sectors, entrepreneurs can leverage market opportunities and potentially achieve long-term success. However, careful analysis and consideration of the specific market dynamics and business strategies are essential to capitalize on these trends effectively.

Article First Published at: https://www.cnbc.com/2023/07/07/jpmorgan-these-cheap-global-sectors-will-outperform.html

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