Europe has been one of the brightest spots in the global stock market this year, with the benchmark Stoxx 600 up around 7% since the beginning of 2023 — a shade better than the S & P 500 ‘s 5% return over the same period. And Wall Street is calling Europe a better bet than the U.S. right now . “We are tactically overweight Europe versus the U.S. Europe faces a tricky growth/policy tradeoff and war in Ukraine is not over yet, but some of the structural and cyclical headwinds are turning around favorably, reducing somewhat the downside risk to earnings,” Barclays’ strategist Emmanuel Cau, wrote in a note on Jan. 20. “The region also remains cheap and under-owned unlike the U.S.” Amid this bullishness on Europe, however, a number of investment banks have named stocks in the region they think investors should avoid. Underweight stocks One such stock is Danish shipping firm Maersk , which is on Barclays’ list of underweight stock calls for the first quarter of 2023. The bank said Maersk is entering a period of “significant earnings volatility” with a negative earnings outlook. Barclays’ estimate for the company’s earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2024 is 15% below consensus. Swedish industrial firm SKF also makes Barclays’ list. “We expect the stock to underperform as [purchasing managers’ indexes] continue to deteriorate, consistent with historical patterns,” analyst Lars Brorson wrote in the Jan. 20 note. The bank said prices for SKF’s products, which include rolling bearings and industrial seals, continue to lag “persistent” cost headwinds, and its planned portfolio transformation is likely to take years — not quarters. Barclays’ price target of 140 Swedish krona ($13.50) on the stock suggests the stock has potential downside of almost 25% to its Jan. 30 closing price. ‘High conviction’ sells UBS has also identified a host of “high conviction” sell stocks. “Capital goods, which is one of our least preferred sectors, features a lot in our sell list,” UBS’ associate strategist Sutanya Chedda wrote in a note on Jan. 26. Within this space, the bank is bearish on British company Bunz . It says the distribution company will see falling revenues and margin pressure into 2024 given the expected price deflation and customer budget pressures. UBS has a price target of £24 ($29.60) on the stock, which implies potential downside of about 19%. Swedish mining equipment manufacturer Epiroc is sell-rated by UBS, with the bank projecting a decline in mining equipment orders this year amid falling commodity prices, an uncertain macro environment and lower industrial activity. The bank has ascribed a price target of 145 Swedish Krona on the stock, which implies potential downside of 30%. Automaker Volvo is also one of UBS’ sell calls. The bank has forecast lower margins and orders momentum than consensus. “We believe that with an already large backlog, Volvo will need to increase production to turn deliveries into sales (subject to supply chain constraints) but this may come from the expense of margins, with management flagging in their 3Q22 results that for the first time that since the summer holidays, Volvo had seen an increasing need to support suppliers financially as a result of rising energy prices,” the bank said. — CNBC’s Michael Bloom contributed to reporting