Lloyds Banking Group PLC (LSE:LLOY), Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB), Hays PLC (LSE:HAS) and Taylor Wimpey PLC (LSE:TW.) have been highlighted by Credit Suisse as overlooked investment gems.
Why? Well, it's a bit complicated and does involve the use of Venn diagrams.
The broker looked at its coverage universe from two angles.
Firstly, it took those stocks where its analysts have the highest conviction that the shares will outperform and identified those where Credit Suisse’s analysts' earnings estimates and target prices are above consensus and where the consensus forecasts would not be considered “overly bullish” in a historical context.
Included in this cohort was the aforementioned companies in the first paragraph plus fund manager Abrdn PLC (LSE:ABDN) and consumer goods giant Unilever PLC (LSE:ULVR).
Secondly, it looked at its analysts’ outperform recommendations on stocks where market expectations are not particularly demanding; in this context, the filter was cash flow return on investment (CFROI), specifically where the market-implied CFROI is below forecast CFROI and the historical median value of CFROI.
Making the cut in this group was National Grid PLC (LSE:NG.).
The interesting bit comes in Credit Suisse’s Venn diagram, which determined that Abrdn, Unilever and National Grid failed to qualify for both camps, whereas Lloyds, Reckitt, Hays and Taylor Wimpey did.
Credit Suisse called these its “Top of the Crop” Outperform Ideas.