2022년 12월 13일 화요일

UBS economists see a recession coming in 2023. Here are the 37 stocks that will lead the market recovery in the first half of next year, the bank says.

 

  • Defensive stocks will outperform at the start of 2023, UBS strategists say.
  • But the focus will shift to cyclicals sometime next year, they say.
  • The bank shared in a recent note 37 "early cyclical" stocks that will lead that shift.

The US economy will enter into a recession next year, economists at UBS believe.

Therefore, defensive stocks — those that tend to perform well in any economic environment, as opposed to cyclical stocks, which perform better when the economy is in good shape — will outperform in the first quarter, equity strategists at the bank said in a note to clients last week.

But as the economic picture improves, cyclicals will start to bounce back, they said. Market focus on the shift cyclical outperformance will likely intensify in the second quarter, the strategists said, a recovery should start to priced sometime by the middle of 2023.

To get an idea of stocks that will be at the forefront of the recovery, the strategists created an "early cyclical" screen with companies whose historical performance meets the criteria below. 

"We only include stocks which rank in the top 30th [percentile] of our proprietary cyclical ranking score," said Keith Parker, the bank's chief US equity strategists and the lead author of the note. "We then only include stocks whose 6m relative returns leads the 6m change in our cyclicals vs defensive screen by at least 1 month and with a correlation > 25%. We also include cyclical stocks who have on average outperformed by more than 3% one month prior to cyclical vs defensive turning points since 2010."

Companies on the list with market caps below $5 billion include: IPG Photonics Corporation (IPGP); Watts Water Technologies (WTS); PVH Corp (PVH); Onto Innovation (ONTO); PotlatchDeltic Corporation (PCH); Kohl's Corporation (KSS); American Eagle Outfitters (AEO); Worthington Industries (WOR); LCI Industries (LCII); Urban Outfitters (URBN); Lindsay Corporation (LNN); Apollo Medical Holdings (AMEH); Monarch Casino & Resort (MCRI); Alexander & Baldwin (ALEX); PennyMac Mortgage Investment Trust (PMT); Patrick Industries (PATK); and Stewart Information Services Corporation (STC).

Stocks with larger market capitalizations tend to outperform smaller cap stocks through the first 3/4 of a recession, UBS said in the note. The same is true for cyclicals vs. defensives.

The 20 on the list with market caps above $5 billion are listed below in ascending order of their market caps. 

1. Gap

gps
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Ticker: GPS

Market cap: $5.3 billion

Sub-industry: Apparel Retail

Days lead ahead of cyclical vs defensive shift: 23

Correlation of lead: 35%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 4%

Source: UBS

 

2. Newell Brands

nwl
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Ticker: NWL

Market cap: $5.4 billion

Sub-industry: Housewares & Specialties

Days lead ahead of cyclical vs defensive shift: 66

Correlation of lead: 20%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -4%

Source: UBS

3. Generac Holdings

gnrc
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Ticker: GNRC

Market cap: $6.7 billion

Sub-industry: Electrical Components & Equipment

Days lead ahead of cyclical vs defensive shift: 56

Correlation of lead: 28%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -6%

Source: UBS

4. Amkor Technology

amkr
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Ticker: AMKR

Market cap: $6.7 billion

Sub-industry: Semiconductor Equipment

Days lead ahead of cyclical vs defensive shift: 19

Correlation of lead: 39%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -5%

Source: UBS

5. DXC Technology

dxc
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Ticker: DXC

Market cap: $6.8 billion

Sub-industry: IT Consulting & Other Services

Days lead ahead of cyclical vs defensive shift: 26

Correlation of lead: 46%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -2%

Source: UBS

6. Capri Holdings

cpri
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Ticker: CPRI

Market cap: $6.8 billion

Sub-industry: Apparel Accessories & Luxury Goods

Days lead ahead of cyclical vs defensive shift: 29

Correlation of lead: 48%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 12%

Source: UBS

7. Cleveland-Cliffs

CLF
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Ticker: CLF  

Market cap: $8.1 billion

Sub-industry: Steel

Days lead ahead of cyclical vs defensive shift: 3

Correlation of lead: 36%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 5%

Source: UBS

8. Lamar Advertising Company

LAMR
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Ticker: LAMR

Market cap: $8.6 billion

Sub-industry: Specialized REITs

Days lead ahead of cyclical vs defensive shift: 19

Correlation of lead: 32%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -5%

Source: UBS

9. AGCO Corporation

AGCO
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Ticker: AGCO

Market cap: $9.7 billion

Sub-industry: Agricultural & Farm Machinery

Days lead ahead of cyclical vs defensive shift: 27

Correlation of lead: 36%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -4%

Source: UBS

10. TD SYNNEX

snx
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Ticker: SNX

Market cap: $9.8 billion

Sub-industry: Technology Distributors

Days lead ahead of cyclical vs defensive shift: 25

Correlation of lead: 36%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 1%

Source: UBS

11. Qorvo

qrvo
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Ticker: QRVO

Market cap: $9.8 billion

Sub-industry: Semiconductors

Days lead ahead of cyclical vs defensive shift: 66

Correlation of lead: 18%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 6%

Source: UBS

12. Xylem

xyl
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Ticker: XYL

Market cap: $20.4 billion

Sub-industry: Industrial Machinery

Days lead ahead of cyclical vs defensive shift: 53

Correlation of lead: 32%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -1%

Source: UBS

13. Gartner

IT
Markets Insider

Ticker: IT

Market cap: $27.1 billion

Sub-industry: IT Consulting & Other Services

Days lead ahead of cyclical vs defensive shift: 0

Correlation of lead: -5%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 3%

Source: UBS

14. Simon Property Group

spg
Markets Insider

Ticker: SPG

Market cap: $39.1 billion

Sub-industry: Retail REITs

Days lead ahead of cyclical vs defensive shift: 66

Correlation of lead: -21%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 4%

Source: UBS

15. Microchip Technology Incorporated

mchp
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Ticker: MCHP

Market cap: $42.1 billion

Sub-industry: Semiconductors

Days lead ahead of cyclical vs defensive shift: 42

Correlation of lead: 42%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -1%

Source: UBS

16. Freeport-McMoRan

fcx
Markets Insider

Ticker: FCX

Market cap: $54.3 billion

Sub-industry: Copper

Days lead ahead of cyclical vs defensive shift: 19

Correlation of lead: 57%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -4%

Source: UBS

17. Lam Research

lrcx
Markets Insider

Ticker: LRCX

Market cap: $62.9 billion

Sub-industry: Semiconductor Equipment

Days lead ahead of cyclical vs defensive shift: 42

Correlation of lead: 29%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -2%

Source: UBS

18. Applied Materials

amat
Markets Insider

Ticker: AMAT

Market cap: $92.6 billion

Sub-industry: Semiconductor Equipment

Days lead ahead of cyclical vs defensive shift: 59

Correlation of lead: 45%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -6%

Source: UBS

19. Intuit

intu
Markets Insider

Ticker: INTU

Market cap: $111.5 billion

Sub-industry: Application Software

Days lead ahead of cyclical vs defensive shift: 41

Correlation of lead: 2%

Avg 1m return prior to cyclical vs defensive turning points since 2010: 4%

Source: UBS

20. Deere & Company

DE
Markets Insider

Ticker: DE

Market cap: $132 billion

Sub-industry: Agricultural & Farm Machinery

Days lead ahead of cyclical vs defensive shift: 38

Correlation of lead: 40%

Avg 1m return prior to cyclical vs defensive turning points since 2010: -2%

Source: UBS


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