Investing.com — Citi analysts outlined their Q1 2025 equity strategy, emphasizing a balanced approach between macroeconomic conditions and policy uncertainty.
Their “SIGN (Sector & Industry Group Navigator)” outlines key areas for investors to focus on as the year progresses.
The strategy includes a combination of growth, cyclical, and defensive plays, adapting to mixed signals in the economy.
Citi analysts warned that “Trump-related policy uncertainty during Q1” could add to market volatility.
They suggest that investors prioritize sectors with strong fundamentals, reasonable valuations, and opportunities for margin improvement.
Citi recommends overweight positions in sectors such as Health Care, Communication Services, and Energy.
Healthcare moved into overweight, with Pharmaceuticals and Biotechnology leading the way due to “right-size” measurements and fundamentals close to flexibility.
Communication Services remains a strong pick, bolstered by strong growth drivers in Media & Entertainment and attractive Telecommunications ratings.
Analysts also represent Semiconductors in the Information Technology space, citing the sector’s growth opportunities and continued margin expansion.
In contrast, Consumer Discretionary has been relegated to an underweight position.
“Expectations appear inflated compared to consensus estimates,” Citi noted.
Citi said banks remain its favorite cyclical overweight, benefiting from improving deposit growth and loan repayment trends.
Energy is described as an “overweight call,” with potential to rebalance as fiscal stimulus and infrastructure investment gain momentum.
On the defensive side, Food, Beverage & has improved in the fat, and the fundamental outlook looks strong, “while the industry group is trading near best-selling levels.”
With potential tax risks and geopolitical uncertainty, Citi urges investors to align industry views with stock selection. Overweight stocks are three of the “Magnificent 7”, Alphabet (NASDAQ:), Meta (NASDAQ:), and Nvidia (NASDAQ:), Market Weight two, Microsoft (NASDAQ:) and Amazon (NASDAQ:) , and Underweight Apple. (NASDAQ: ) and Tesla (NASDAQ: ).
