This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

JPMorgan Says Top European Stocks May Soar 84%

(Updates to add note on Michelin cost cuts.)

NEW YORK ( TheStreet) -- JPMorgan expects European countries to get their house in order, boosting some shares by as much as 84% in the next 12 months.

The U.S. investment bank identifies the shares of 30 companies in various industries that are worth buying heading into 2012. Most of the top picks are diversified across countries, though there's a concentration in France and Germany, the most stable in the eurozone.

A portfolio of JPMorgan's top European picks for 2011 would have declined by 11% so far this year, compared with the benchmark Stoxx Europe 600 Index's 12% drop. EADS, a Dutch aerospace and defense company, was the best-performing pick this year, up 25%. Carmaker PSA Peugeot Citroen was the firm's worst selection, down 50%.

Monday was a big day for Europe. France and Germany told the European Union that they must decide if they will accept greater central control over their national budgets. Then Standard & Poor's said it may cut Germany's and France's AAA credit ratings as the agency put 15 euro nations on review for a possible downgrade.

U.S. Treasury Secretary Tim Geithner is currently on a three-day trip to Europe to push European leaders to commit to taking action at the conclusion of their meetings on Thursday and Friday. After a meeting with the French finance minister, he noted he was confident that their efforts would be succeessful.

JPMorgan's European equity strategists say more aggressive intervention in Europe, growing global economies, easing emerging-market monetary policy and strong corporate balance sheets, combined with equity markets that are underowned, provides an opportunity to get involved in select stocks.

The strategists caution that the price of safety, defined as high-quality and defensive growth stocks, is too high right now. As such, they are recommending buying low-quality and value shares. Mislav Matejka, head of European equity strategy at JPMorgan, says: "While it doesn't usually sound appealing to buy 'low-quality' stocks, we note that they trade at extremely cheap valuations at present."

He says the "valuation differential between value and growth is extreme, calling for a reversal of the trade."

What follows are JPMorgan's top five European stock picks for 2012, assuming the companies' shares reach the bank's price targets.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,987.51 -61.49 -0.36%
S&P 500 1,985.54 -11.91 -0.60%
NASDAQ 4,567.5980 -24.2080 -0.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs