Jefferies names capital goods top picks as growth slows down

Dormakaba Holding AG

16/03/2022 10:00

** In a note on European capital goods, Jefferies says the
geopolitical tensions are pushing the industrial cycle into a
slower growth environment, even recessionary one, marked by
higher input costs and supply chain constraints
    ** The broker says 40-45% of the capital goods sector's cost
base is located in Europe which sources about 35% of its steel
imports from Russia and Ukraine; this will lead to production
disruption and higher cost inflation, according to Jefferies
    ** Energy-intensive industries such as steel, pulp and
paper, and those with complex supply chains like chipmakers,
automotive, are most vulnerable, the broker says, while the less
affected end-markets include mining and non-residental
construction
    ** Jefferies prefers "quality at a reasonable price", naming
lockmaker Assa Abloy  ASSAb.ST , engineering group Sandvik
 SAND.ST  and elevator maker Kone  KNEBV.HE  as its top picks,
(all rated "buy")
    ** Its other "buy"-rated stocks include leisure products
supplier Dometic  DOMETIC.ST  and leisure vehicle maker Knaus
Tabbert  KTAG.DE 
    ** The brokerage upgrades engineering group Atlas Copco
 ATCOa.ST  to "hold" from "underperform" after a recent
de-rating
    ** It maintains "hold" on security group Dormakaba Holding
 DOKA.S , food-processing equipment maker GEA  G1AG.DE ,
elevator and escalator maker Schindler  SCHP.S  and industrial
bearings maker SKF  SKFb.ST 

 (Reporting by Marta Frackowiak)
 ((marta.frackowiak@thomsonreuters.com))