Barclays economists forecast a modest acceleration in world growth next year to 3.3 percent from 3.1 percent. They recommend overweight developed market equities relative to fixed income. They base that on valuation. Bonds are too expensive. Equity still looks cheap, especially in Europe.
And how will Europe fair? Even with anemic growth again next year, Barclays expects a rally in European equities in 2013.
In their 226 page report, they give clients their 156 top picks plus the reasoning behind their calls. Here’s a sampling of 30 Barclays faves
The list of stocks is huge with positive industry view. In a few cases, dividend payers with yield over U.S. Treasurys were chosen over growth stocks that do not pay dividends. Companies like Apple (AAPL) are also a top pick, but are not on the list because the industry view for that particular technology segment was neutral. Emerging market names like Brazilian miner Vale (VALE) made the list, and has a high dividend, currently, of around 4 percent. But their view on the sector was neutral. Upside and downside potential were not a factor.
I do not like to share the list but just few quotes which may be very helpful :
- Remember you are buying businesses, not just stocks. Pay close attention to the quality of the business, and especially the quality of the management.
- Look for companies which have earned the trust of consumers, and which have very strong brand names.
- Never invest in any idea you can’t illustrate with a crayon.