Energy sector dominate European stock markets too
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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.
The energy sector once again performed exceptionally well on European stock exchanges this week, continuing its weeks-long run as one of the leading sectors. Companies producing basic consumer goods also performed well. Despite this, we did not find any high-quality stock curves that are currently turning and giving appropriate entry signals that would be technically attractive. The shares of Nestlé and Galp Energia may offer more favorable entry points after a minor correction.
Best rated European stocks based on momentum ranking
Compelling technical picture
Nestle S.A. (daily): A longer-term downward trend can be observed, but there are already signs of a reversal. No further decline has occurred below the low of 75, suggesting that selling pressure is gradually running out of steam. Although the swing peaks of the rising waves continue to decline, this picture would change if, after a higher low, the price broke through the thin red trend line. This would be a clear long signal. A retest around 78 may be sufficient for the curve to give a long entry if the above conditions are met.
Galp Energia (daily): A structural change began on the curve in mid-July last year, followed by a deep but, from the perspective of long setups, non-critical retest. The rise in recent weeks has brought a new swing high, indicating that the trend has reversed. A more decisive retest could provide a favorable risk-reward ratio and a technically better entry point. There are still good long entry opportunities in the zone below 17.19 above the rising trend line. If the price rises above 18.75 on a sustained basis, it would also make a new peak likely.
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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