It has been an unforgettable first half for investors — and not in a good way, as a brutal sell-off swept across global equity markets and brought major indexes to new lows. The S & P 500 suffered its worst first half since 1970, while the Nasdaq Composite ‘s 28.9% decline for the first six months condemned the index deep into a bear market. The MSCI World also had its worst start to the year on record. Hopes for a second half respite appear dim, with market watchers expecting continued volatility as recession fears grow amid what is expected to be an aggressive rate hike cycle. As it stands, the U.S. economy has likely already entered a technical recession , according to a Federal Reserve tracker of economic growth. So how should equity investors position in such an environment? CNBC Pro trawls through Wall Street research to find out what analysts are saying. Bank of America In a note outlining some of its “top” global ideas for the third quarter, Bank of America named several stocks that its analysts expect to “significantly outperform” their peers the most. One of its top picks is Airbus , which is the bank sees as a “key beneficiary” of a “strong demand environment medium term.” The company has a solid balance sheet and is expected to grow its revenues and margins, Bank of America analyst Eric Lopez said in the note dated July 1. Lopez also sees a “positive outlook” for Airbus’ Defence and Space, and Helicopter, divisions. The bank has a price target of 179 euros ($186.50) on the stock, which closed at around 95 euros on Friday, representing a 88.4% potential upside. Dutch semiconductor equipment manufacturer ASML also makes the bank’s list. Bank of America believes the company will experience “superior growth” relative to peers. It called ASML a “defensive name in uncertain times” and expects the company to raise its 2025-2030 guidance. Shares in the company closed at around 431 euros on Jul. 1, which implies a potential upside of 70.1% to the bank’s price target of 733 euros on the stock. Bank of America also likes German industrial giant Siemens , describing it as a “resilient business worth paying for.” The company also has a solid and expanding software portfolio, according to the bank. “Siemens was the only company in our coverage to beat & raise [revenue] in Q2, as well as delivering a beat on [free cash flow],” Lopez added. The bank has ascribed a price target of 175 euros on the stock, which implies a potential upside of 82.3% to its closing price of 96 euros on Friday. Low-cost carrier Ryanair is another stock liked by Bank of America. It believes Ryanair’s lower unit costs and superior margins make the airline best placed to withstand rising costs. Bank of America also sees potential for “strong growth and market share gains” for the company in the medium term. The bank has a price target of 17 euros on the stock. Shares in the carrier closed at 11.5 euros on Jul. 1, which represents a potential upside of 47.8%. Deutsche Bank The tech sector has been one of the hardest hit in the market rout this year, but Deutsche Bank is still positive on several stocks within the sector. One of the bank’s top picks, outlined in a July 1 note, is telecom giant T-Mobile , which the bank believes has the “best multiyear growth story” in the sector. The company is expected to grow its free cash flow per share at a compounded rate of 31% over the next five years, according to Deutsche Bank. The bank has a price target of $185 on the stock — an implied upside of 37.5% Chip stock Broadcom also makes Deutsche’s list, with the bank describing the stock as a “safe port” in the current “macro storm.” “We believe Broadcom’s combination of infrastructure-heavy, mission-critical semiconductor and software products with relatively minimal consumer-oriented exposure as offering desirable stability in an environment of rising macro/semi sector volatility and an attractive investment for those that value long-term returns,” Deutsche’s analyst Josh Ray said on Jul. 1. The bank’s price target of $700 on the stock represents a potential upside of 44.1%. Other tech stocks that made Deutsche’s list include Amazon , Uber Technologies and KLA Corp . JPMorgan Chase JPMorgan has a number of stock picks to play what it says is “China’s Internet comeback.” China’s tech sector has been slammed by a crippling regulatory crackdown but has enjoyed a significant rebound since apparently bottoming in March . In an Asia equity strategy note dated Jun. 29, the bank cited the “peaking” of domestic regulatory risk, an improving relationship between China and the U.S., and the “low probability” of U.S. secondary sanctions risks against China, for its positive outlook. Its buy-rated picks within this space include electric vehicle makers NIO and Warren Buffett-backed BYD . On Friday, NIO reported record EV sales as it delivered nearly 13,000 vehicles in June, up 60% from a year ago. While BYD has yet to report its June sales figure, the company saw sales more than double in May as it strengthened its position as one of the top three automakers in China. Other stocks that made JPMorgan’s “China’s Internet comeback” list include Meituan , Pinduoduo , Alibaba and Tencent .
Quarterly Investment Guide Q3 2022: Wall Street global stock picks – CNBC