Buy into Europe’s recovery with these five stocks

Cyclical stocks look well poised to profit from the European recovery. Fund manager John Baker tips five to buy now.

When we look at investment opportunities in European equities, cyclical stocks seem well poised to benefit from the improving economy. That's why we are significantly overweight on the European automotive sector.

For example, the tyre maker Continental (Dax: CON) is benefiting from higher profit margins and faster growth than the rest of the vehicle parts industry. The company recently said that it expects profits for the year ahead to be better than previously forecast, and it is also very cash generative, meaning it is well placed to either buy other companies or to return cash to shareholders (or both). Both suggest potential for further share price growth.

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John Baker is fund manager of the JPM Europe Dynamic ex-UK fund.