Goldman Sachs recommended that investors consider a specific strategy when trading European markets right now given the "scope for near-term volatility in equities." This follows the recent market rally and is expected to prove effective "until inflation momentum turns more negative," the investment bank's analysts wrote in a May 23 research note. Despite logging a drop in the past few days, the pan-European Stoxx 600 is up around 10.7% year-to-date and up some 18.6% in the past year. Going forward, those searching for pockets of opportunities in the region and "looking to position somewhat defensively" can look to Goldman's list of buy-rated stocks "offering higher relative risk-adjusted upside." Here are two such stock ideas, which are also on the Wall Street bank's conviction list. Air Liquide Goldman analyst Georgina Fraser struck a bullish tone on French chemicals player Air Liquide and sees it as "best positioned from a supply side perspective." Its competitiveness is thanks in large part to "its strong market share, highly consolidated market as well as higher barriers to entry," she noted. "These suggest Air Liquide's markets are unlikely to be disrupted and is a key driver of the company's ability to sign long-term take-or-pay contracts with customers, which provide strong growth visibility," Fraser added. Shares of Air Liquide are traded on Euronext Paris Exchange under the ticker AI - FR. It is also traded in U.S.′ over-the-counter markets as AIQUF. Its Paris-listed stock is up around 13.2% in the past 12 months. Goldman gives the stock around 23.6% upside from a 12-month price target of 223 euros ($242.10). Bureau Veritas Another stock on Goldman's list is French company Bureau Veritas , known for its laboratory testing, inspection and certification services. The company's exposure to secular themes around energy transition, energy security and sustainability is expected to propel its growth "at a faster rate [than] its peers given is early mover advantage," analyst Suhasini Varanasi noted. Shares of BVI are traded on Euronext Paris Exchange under the ticker BVI - FR. It is also traded in the First Trust International Developed Capital Strength ETF (2% weight) and FlexShares International Quality Dividend Defensive Index ETF (0.8%). Over the last 12 months, shares of BVI have been up around 12.6%. Goldman gives the stock nearly 20% upside from a 12-month price target of 37 euros. — CNBC's Michael Bloom contributed to this report.
