- UBS has published a list of stocks they believe are set to rocket higher next year.
- To be included in the list, a stock must have a “buy” rating at the firm and have a catalyst that most investors are ignoring.
- Markets Insider picked out the 11 stocks in the US that UBS says will have the most upside potential.
In a recent note to clients, UBS equity analysts highlighted the stocks they believe that are best set to surge in the year ahead.
To be included on the list, a stock must have a “buy” rating and a catalyst most investors are ignoring.
“As well as screening for upside to price target, upside/downside skew, market cap, sector weightings and liquidity, we focused on stocks where we believe our analysts have a truly differentiated view versus consensus,” the firm said.
After going through the list, Markets Insider picked out the 11 US stocks that UBS says will have soar at least 35% in 2019.
Below are the 11 stocks, in ascending order of their upside potentials:
Closing Price on 12/18: $US46.52
UBS Price Target: $US63 (+35%)
“Even with limited revenue growth, efficiency improvements and capital optimization should drive mid to high teen EPS growth and considerable ROTCE expansion in 2019 and 2020. We forecast that Wells buys back 17 % of its shares by year-end 2020, providing considerable support to the EPS and ROTCE trajectory.”
Advance Auto Parts
Closing Price on 12/18: $US158.24
UBS Price Target: $US215 (+36%)
“The industry is in a good spot with a healthier car park and the potential benefit from parts inflation. A strong top-line should drive expense leverage across the business. Some of the investment margin drags will roll off and it will see savings from closing duplicative DCs. Plus, inventory optimization and managing its AP/Inventory ratio should lead to improved free cash flow, which should lead to greater share repurchases.”
Closing Price on 12/18: $US132.32
UBS Price Target: $US180 (+36%)
“Our analysis suggests improved efficiency in CY17 and CY18, and continued progress here should lead to better margins in the future. We think strong top line growth plus better-than-expected margins and cash flow can drive shares higher from here.”
Closing Price on 12/18: $US1028.71
UBS Price Target: $US1400 (+36%)
“We continue to view Alphabet as a category leader & top pick for investors looking for exposure to a number of long-term secular growth themes in the Internet sector,” said analyst Eric Sheridan.
Closing Price on 12/18: $US135.18
UBS Price Target: $US190 (+41%)
“We find HON’s overall portfolio positioning relative to the macro landscape relatively positive. End-market dynamics should remain strong in 2019 while management remains prudent in execution. We also expect management to smartly but aggressively deploy capital with a strong balance sheet in 2019. With plenty of capital available, Intelligrated-like M&A opportunities seem likely.”
Closing Price on 12/18: $US279.47
UBS Price Target: $US400 (+43%)
“Our proprietary analysis along with UBS Evidence Lab created a picture of LMT’s revenue composition by funding account, which allowed us to construct a revenue forecasting model predicting LMT to have the fastest pace through 2020E (8%+, though we are including 6% in our estimates).”
Closing Price on 12/18: $US67.80
UBS Price Target: $US100 (+47%)
Closing Price on 12/18: $US17.40
UBS Price Target: $US26 (+49%)
“Along with the company’s strategic value amid continued industry consolidation and a depressed valuation, we see a compelling risk-reward.”
Closing Price on 12/18: $US15.44
UBS Price Target: $US25 (+62%)
“Additionally, favourable NAND price environment should spur greater adoption of SSDs in both client and enterprise, providing further momentum for MRVL’s fast-growing SSD controller business.”
Closing Price on 12/18: $US39.78
UBS Price Target: $US80 (+101%)
“The market thinks KORS’ portfolio of brands is weak and unlikely to grow. However, multiple UBS Evidence Lab studies suggest KORS’ brands are strong. We forecast an 8% 5-yr. EPS CAGR and our DCF analysis points to an $US80 price target. We anticipate KORS’ P/E rising to ~16x from ~8x today and see a 5:1 upside/downside skew.”
Canadian Natural Resources
Closing Price on 12/18: $US24.49
UBS Price Target: $US57 (+133%)
“CNQ’s DAPSG profile from its assets should lead to significant FCF and de-leveraging, positioning CNQ to continue to return cash to shareholders and expand traditional multiples.”
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