- 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:
Wells Fargo
Ticker: WFC
Closing Price on 12/18: $46.52
UBS Price Target: $63 (+35%)
"Wells Fargo's substantial underperformance since 2016 has created a long-term buying opportunity," said analyst Saul Martinez.
"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."
Source: UBS
Advance Auto Parts
Ticker: AAP
Closing Price on 12/18: $158.24
UBS Price Target: $215 (+36%)
"Its initiatives like cross-banner visibility and its marketing campaign are driving the top-line," said analyst Michael Lasser.
"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."
Source: UBS
Salesforce.com
Ticker: CRM
Closing Price on 12/18: $132.32
UBS Price Target: $180 (+36%)
"We think Salesforce is establishing a leading position as an enabler of digital transformations, and this trend will remain a key area for IT budget growth in CY19," analyst Jennifer Lowe noted.
"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."
Source: UBS
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