Italy on the Mend: Too Little Too Late?
To the temporary relief of the European and international stock markets, Italy's new Prime Minister Mario Monti introduced a proposal to cut his nation's debt. The proposal coincides with a critical week for Europe's efforts to contain the sovereign debt crisis and prevent a breakup of the shared currency.
A crucial week
German Chancellor Angela Merkel and French President Nicolas Sarkozy are currently developing a plan for stricter enforcement of the region's deficit rules. They will present it to EU leaders at a summit on December 9, an event the international markets are highly anticipating.
"We want it to be impossible for the deregulation that led to the eurozone's current situation to recur," Sarkozy said in Paris. "Our preference is for a treaty of 27, but we're perfectly ready to have a treaty of 17."
Italy is the eurozone's third-largest economy and is generally considered too large to be bailed out.
"The huge public debt of Italy isn't the fault of Europe, it's the fault of Italians," Monti told a news conference as he detailed the package yesterday. "Together, we will make it."
The package, which was approved by the Cabinet yesterday, asks Italians to sacrifice 30 billion euros ($40 billion) in additional emergency economic measures. It breaks down to include 20 billion euros ($27 billion) of spending cuts and tax hikes, and 10 billion euros of measures to boost Italy's anemic growth (via CNBC).
More specifically, "his government agreed Sunday to slap taxes on property and luxury goods, increase the age at which retirees can draw pensions, trim the cost of Italy's political class and give incentives to companies that hire women and young workers."
Monti said the package is designed to be as fair as possible. To show that he is not immune to the necessary sacrifices, he announced that he would give up his own salary as premier and finance minister.
Investing ideas -- EU rebound
"If the euro zone holds together -- as we suspect it will -- there should be considerable upside for stocks," said Ian Scott, chief global strategist at Nomura Holdings in an interview with Bloomberg. "More than a recession is already in the price."
With this in mind, we wanted to know what European stocks might benefit the most from a market rebound, if one were to occur. For ideas, we created a universe of European stocks traded on U.S. exchanges that are technically oversold, with RSI(14) readings below 40.
Do you think these names could be set for a rebound if Europe makes headway on the debt crisis this week? Use the list below as a starting-off point for your own analysis. List sorted by RSI. (Click here to access free, interactive tools to analyze these ideas.)
1. FLY Leasing Limited (NYS: FLY) : Operates as a global aircraft lessor. Market cap of $307.43M. Country: Ireland. RIS(14) at 39.62. The stock is currently stuck in a downtrend, trading -6.44% below its SMA20, -5.6% below its SMA50, and -8.55% below its SMA200.
2. Elster Group (NYS: ELT) : Provides gas, electricity, and water meters and related communications, networking, and software solutions. Market cap of $1.55B. Country: Germany. RIS(14) at 39.09. The stock is currently stuck in a downtrend, trading -6.28% below its SMA20, -13.28% below its SMA50, and -20.42% below its SMA200.
3. Velti (NAS: VELT) : Provides mobile marketing and advertising solutions for mobile operators, ad agencies, brands, and media groups. Market cap of $448.96M. Country: Ireland. RIS(14) at 38.59. The stock is currently stuck in a downtrend, trading -10.53% below its SMA20, -10.06% below its SMA50, and -43.46% below its SMA200.
4. Ternium (NYS: TX) : Engages in manufacturing and processing a range of flat and long steel products for construction, home appliances, capital goods, container, food, energy, and automotive industries. Market cap of $3.42B. Country: Luxembourg. RIS(14) at 38.32. The stock is currently stuck in a downtrend, trading -16.66% below its SMA20, -17.96% below its SMA50, and -35.83% below its SMA200.
5. Nokia (NYS: NOK) : Provides Internet and digital mapping and navigation services worldwide. Market cap of $21.47B. Country: Finland. RIS(14) at 37.35. The stock is currently stuck in a downtrend, trading -13.% below its SMA20, -13.17% below its SMA50, and -21.15% below its SMA200.
6. Coca-Cola Hellenic Bottling Company (NYS: CCH) : Engages in the production, sale, and distribution of alcohol-free beverages primarily in Europe. Market cap of $5.66B. Country: Greece. RIS(14) at 36.87. The stock is currently stuck in a downtrend, trading -7.2% below its SMA20, -12.18% below its SMA50, and -33.12% below its SMA200.
7. Alcatel-Lucent (NYS: ALU) : Provides products, solutions, and transformation services that enable service providers, enterprises, governments, and strategic industries to deliver voice, data, and video communication services to end-users worldwide. Market cap of $3.88B. Country: France. RIS(14) at 36.05. The stock is currently stuck in a downtrend, trading -10.16% below its SMA20, -31.23% below its SMA50, and -62.04% below its SMA200.
8. Sequans Communications (NAS: SQNS) : Designs, develops, and supplies 4G semiconductor solutions for wireless broadband applications. Market cap of $141.88M. Country: France. RIS(14) at 34.38. The stock is currently stuck in a downtrend, trading -12.41% below its SMA20, -17.33% below its SMA50, and -52.64% below its SMA200.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research.
Kapitall's Rebecca Lipman does not own any of the shares mentioned above. Data sourced from Finviz.
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