Investing.com — European cyclical stocks are positioned for strong performance as the region prepares for economic acceleration in 2026, according to a recent Jefferies analysis.
With fiscal and monetary stimulus expected to drive European EPS growth to approximately 10%, several key players across building materials, infrastructure, banking, and automotive sectors stand out as potential outperformers.
The analysis highlights companies well-positioned to capitalize on improving investor sentiment and specific growth catalysts in their respective markets.
This Swiss building materials company is one of Jefferies’ top picks in that sector, with robust momentum in its two largest markets – Germany and Switzerland – which together represent about 40% of sales.
With approximately 90% of group sales derived from Europe, Geberit offers pure-play exposure to the region’s recovery.
Infrastructure stimulus in Germany and property tax reform in Switzerland could drive residential renovation and new build activity, while normalized customer inventories provide room for wholesaler restocking.
Jefferies notes these two markets could generate a disproportionate margin benefit, potentially contributing about 70% of group EBIT despite representing 40% of sales. The firm has a price target of CHF732.
In recent news, JPMorgan upgraded Geberit to Neutral from Underweight, citing the company’s strong performance and an expected like-for-like growth of 4.5% for the year.
Jefferies’ top pick in Building & Construction, Heidelberg is expected to benefit from anticipated price increases in Europe, ongoing industry consolidation, and cost savings from its Transformation Accelerator program.
The company’s capital allocation strategy, including M&A and buybacks, should further enhance shareholder returns. Trading at 13x 2026 PE, Jefferies believes Heidelberg remains undervalued relative to peers and has set a price target of €300.
Heidelberg Materials has received several analyst upgrades, including from Barclays and UBS, who noted the company’s attractive valuation and potential benefits from upcoming changes to CO2 pricing in the European cement industry.
As Jefferies’ top infrastructure pick, Skanska is positioned to benefit from improving sentiment in Swedish residential and US commercial property markets.
The company’s strong net cash position and disciplined capital allocation provide flexibility for shareholder returns, while a record construction backlog supports visibility into 2026.
Jefferies expects Skanska to benefit from residential demand recovery, robust construction activity, and potential special dividends as markets normalize. The firm’s price target is SEK295.
Skanska recently announced the sale of its Port7 office complex in Prague for approximately SEK 1.4 billion and also raised its long-term operating margin target for its Construction division to ≥4.0%.
This French bank offers substantial upside potential as its investment case is positively geared to falling rates. With a new CFO expected to professionalize the investment case, Jefferies models buybacks of €4.2 billion over 2024-26, supporting tangible book value per share growth of 21%.
The bank’s asymmetric risk/reward profile and hidden value in listed stakes (approximately 40% of market cap) underpin Jefferies’ conviction, with a price target of €70.
Société Générale has been the subject of multiple analyst upgrades, with firms like Goldman Sachs and Kepler Cheuvreux citing expectations for sustained operating efficiency gains and an improved profitability outlook.
As a market leader in Europe with an improving competitive position in the US, Volvo is well-positioned for growth.
The European market remains steady at replacement levels with potential upside if fiscal stimulus materializes, while U.S. volumes are below replacement and at cycle lows. Jefferies highlights Volvo’s disciplined cost control, resilient aftermarket business, and strong free cash flow, setting a price target of SEK350.
According to data from ACT Research, NAFTA heavy-truck Class 8 orders, a key market indicator for Volvo, declined to 19,700 units in November 2025.
This U.K. retailer offers exposure to structural growth in home improvement with a differentiated value-led model. Recent trading showed retail like-for-like growth of 5.6% and accelerating momentum.
Despite strong top-line trends, management maintained FY25 profit guidance at £48.3 million. Medium-term, Wickes targets approximately 20% profit before tax CAGR.
Jefferies notes the company trades at a discount to UK retail peers despite superior growth prospects, with a price target of 275p.
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