Equity strategist Gerry Fowler urged caution on semiconductor stocks — a hot sector this year — offering up an alternative sector to invest in.
European equity investors should stay steer clear of semiconductor stocks and load up on banks this year, according to UBS' Head of European Equity Strategy Gerry Fowler. Speaking to CNBC's "Street Signs Europe" Thursday, Fowler noted that interest rates in Europe were set to rise, and this should contribute to positive earnings revisions and push up stock prices by 20% from current levels.
A P/B of more than 1 indicates that the total market value of the bank is more than the bank's assets, which includes potential earnings from lending. This means investors are pricing in growth in future earnings. According to FactSet data, there were 24 banks in the Stoxx Europe 600 Banks index with a P/B ratio of less than 1. British bank Barclays ' shares are expected to rise by the most on the list, up 46% over the next 12 months, according to the average price target of 18 analysts.
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