Beyond the War, Merrill Lynch Sees Fallen Angels

The banks, for one, Africa Israel and Delek Group, for two more

"Looking beyond the conflict" is the title of Merrill Lynch's missive to investors as the ceasefire came into effect Monday morning. And what does the New York investment bank see as the guns fall silent?

Previously, analyst Haim Israel had advised investors to focus on stocks with little business affiliation with Israel. That means exporters such as Teva, Israel Chemicals and Ormat Industries. Now he counsels the investment community to keep an eye out for fallen angels, meaning stocks that took a thrashing because they do most of their business in Israel.

So, does he mention any specific fallen angels? He does: the banks, which underperformed the benchmark index of MSCI Israel and MSCI Emerging markets, Delek Group and Africa Israel. Merrill Lynch doesn't cover the latter two but they fall into the fallen angel category, the analyst suggests.

The suggestion to seek out low beta contrasts Merrill Lynch's recommendation to avoid just such domestic market-oriented companies as the war broke out.