L'Oreal's chart looks good even without makeup
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Our Equity Top Pick List
We have updated our Equity Top Pick List to reflect the events of the past quarter. The list includes those stocks, typically US and European ones, that we consider to be proper investment choices from a fundamental point of view. It can provide a starting point for building a sector-diversified equity exposure in portfolios, but can also be used as a watch list. Technical analysis should be used to time / determine the specific investment decision.
Could the momentum return in the semiconductors?
The semiconductor sector has had a challenging quarter, with its performance in recent months lagging behind improvements in underlying fundamentals, even as AI-driven demand remained exceptionally strong. The accelerating adoption of AI by enterprises and the proliferation of AI agents are significantly increasing the demand for computing capacity, which points to a further surge in cloud services and data center investments. Given current supply constraints, record-high backlogs, and higher-than-expected investment needs, we expect further upward revisions to earnings forecasts in the semiconductor industry. Nevertheless, the sector’s valuation appears favorable from a historical perspective, which, in our view, could result in a more attractive risk-return profile in the coming months.
European stock markets have performed well over the past two weeks, with many lagging stocks turning around at this time. Two stocks may be coming to the end of a prolonged correction phase and entering an upward trend. Deutsche Telekom shares have broken through an important level, which could signal a turnaround, while L'Oreal has been in an accumulation phase for some time, creating an opportunity for a breakout.
Best rated European stocks based on momentum ranking
Compelling technical picture
Deutsche Telekom (daily): The stock is after a prolonged correction phase. In recent days, it crossed an important level at 28.13, below which we saw consolidation and slight accumulation. The main long-term trend is upward, currently hovering around the 25 level, so buying was expected as the stock approached this level. Minor retracements may be better buying opportunities, but it would not be good if the stock fell back below 28.13, as this would significantly delay the next long opportunity. There is strong support around 25, which would also be a favorable long spot. A break in the thick green long-term upward trend line would be problematic, indicating strong weakness.
L'Oreal (daily): The downward trend broke in April on the longer curve, but it was unable to break away from the 343.75 support level. In recent days, it has broken through a minor corrective trend with upward gaps, so the chances of it changing bands are increasing. The 406.26 level may be a minor resistance, but in the longer term, if it breaks through this, then values of at least 437.5, but possibly even above 450, could be achievable.
List of stocks with a chance of a turnaround in the coming weeks
Most popular European stocks
The momentum model supports the creation of a technical based stock list that helps to find shorter-term trading opportunities. The model can be used to identify stocks that show reversal signals following more sustained falls/underperformance. We examine one-year, six-month, three-month, one-month and five-day momentum values, which are used to rank the stocks under consideration. The higher a stock is ranked in the order, the better it technically performs relative to the others. The change in the ranking over time is used to determine the life cycle of the stock.
- In the first table, we collect the stocks that show the most attractive picture compared to the others in a given week based on momentum factors, of which those are also presented in a separate chart where a favourable situation can be identified based on additional technical analysis tools.
- In the second table, we list the stocks that are already worthy of being placed in watchlist status. They are not among the best performers, but they have the potential to improve and signal a turnaround in a few days or weeks.
- In the third table, we have also collected the more popular stocks to help identify their position in the momentum order.
The report shows the results of a technical - quantitative based stock screening, which does not examine the fundamental background/value of the companies. For this reason, risk management/position sizing rules should be designed accordingly.
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