7 Stocks JPMorgan Thinks You Should Buy

(Adds average total revenue generated from Europe for the recommended companies.)

NEW YORK ( TheStreet) -- JPMorgan's ( JPM) investment strategists are telling the bank's customers to buy large-cap cyclical stocks because those companies are largely immune to Europe's debt crisis.

The New York-based investment bank's research shows that only 8% of S&P 500 companies' earnings per share are generated in Europe. That implies that $8.40 of $105 in 2012 EPS, the bank's estimate, will come from Europe. If European profits fall by a third, even a modest increase in the rest of the world would compensate for the loss.

Still, the U.S.'s exports to Europe total 14%. JPMorgan, however, points out that that exposure is primarily to stronger European economies, like Germany and the U.K. Emerging markets account for 44% of export volume, helping to offset Europe.

Back home, the economy has been improving, a sign U.S. stocks may extend a rally over the past two months. Most recently, jobless claims last week came in better than expected to a level not seen since February. Consumer sentiment increased more than economists anticipated, reaching a six-month high.

Given this backdrop, the equity-strategy team at JPMorgan did a screen for cyclical companies that have little exposure to Europe and market values of over $3 billion. The movement toward a resolution in Europe, companies buying back shares, U.S. economic momentum, a seasonally strong December and active-manager underperformance may propel JPMorgan's stock picks, the bank's strategists say.

The seven "overweight"-rated stocks in the basket of 19 stocks that the firm is recommending to buy are listed below by potential upside. Of note, the recommended stocks have only 4% of revenues on average coming from Europe. (JPMorgan also has a list of shares to avoid.)

7. Equifax ( EFX)

Company Profile: Generates consumer credit reports.

2011 Return: 4.6%

Current Price (Dec. 13): $37.25

JPMorgan's 2012 Price Target/Upside: $40/7.4%

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6. Apollo Group ( APOL)

Company Profile: Operator of private schools, including The University of Phoenix, among others.

2011 Return: 26.7%

Current Price (Dec. 13): $50.04

JPMorgan's 2012 Price Target/Upside: $57/13.9%


5. Raytheon ( RTN)

Company Profile: Makes air, marine and missile defense systems.

2011 Return: minus 3.1%

Current Price (Dec. 13): $44.92

JPMorgan's 2012 Price Target/Upside: $52/15.8%

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4. Visa ( V)

Company Profile: Global credit card company.

2011 Return: 36.3%

Current Price (Dec. 13): $95.91

JPMorgan's 2012 Price Target/Upside: $112/16.8%


3. Starwood Hotels & Resorts ( HOT)

Company Profile: Hotel company that operates under the names St. Regis, W, Westin, Sheraton and Element.

2011 Return: minus 25.2%

Current Price (Dec. 13): $45.45

JPMorgan's 2012 Price Target/Upside: $60/32%

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2. Agrium ( AGU)

Company Profile: Global provider of fertilizer products to a variety of customers in agricultural, industrial, specialty and export markets.

2011 Return: minus 29%

Current Price (Dec. 13): $65.17

JPMorgan's 2012 Price Target/Upside: $90/38.1%


1. Lam Research ( LRCX)

Company Profile: Supplier of wafer-fabrication equipment and services to the semiconductor industry.

2011 Return: minus 22.4%

Current Price (Dec. 13): $40.18

JPMorgan's 2012 Price Target/Upside: $56/39.4%

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Other stocks JPMorgan likes include: Seagate Technologies ( STX), VeriSign ( VRSN), Altera ( ALTR), SAIC ( SAI), L-3 Communications ( LLL), Cummins ( CMI), Akamai Technologies ( AKAM), Motorola Solutions ( MSI), Gap ( GPS), KLA-Tencor Corp. ( KLAC), NVIDIA Corp ( NVDA), CNH Global ( CNH).

>>To see these stocks in action, visit the 7 Stocks JPMorgan Thinks You Should Buy portfolio on Stockpickr.

-- Written by Lindsey Bell in New York.

>To follow the writer on Twitter, go to Lindsey Bell.

Click here to see Goldman Sachs' Consumer stock picks for 2012.