Now that trade deals are getting done, this out-of-favor stock-market strategy may shine
UBS strategists led by Sean Simonds have a timely note about how the questions will now focus less on policy uncertainty and more on outcome uncertainty. 'We are possibly past the peak of uncertainty as more granular detail on tariffs and other policies come into focus,' they say. 'What comes after this, however, is the policy OUTCOME uncertainty,' with the capitalization the choice of the authors.
'It just doesn't seem right': My sister picks up the check for our parents, but later asks me to repay her
I'm 65 and a widow with 5 children. Should I split my $1.1 million nest egg between them while I'm still alive?
'I'm so confused': Is the U.S.-China trade deal for real? I'm 55 and have $650K in my 401(k). Can I finally rest easy?
My second wife says her 2 kids should inherit our estate, but I also have 2 kids. Is that fair?
My husband and I spend more money on our daughter and her family than on my single son. Do we compensate him?
The UBS team's assumptions were based on 10% universal tariffs and 60% on China — the latter of which is now double the actual tariff level, but given sector tariffs as well, probably a reasonable starting point as to guessing the economic implications. Their assumption is the U.S. economy will slow from a 2% year-over-year rate in the first quarter to 0.7% by the fourth quarter.
'Elevated, but uncertain volatility/risks suggest a value orientation (avoiding high valuations). However, the potential for continued economic momentum into 2026 suggests keeping exposure to some cyclical growth companies,' the UBS team say.
So what's the right strategy? UBS suggests growth at a reasonable price. Granted, that's not a strategy that has worked recently: the Invesco S&P 500 GARP ETF GARP, for instance, has underperformed the broader S&P 500 SPX this year, over the last 52 weeks and the last three years.
'Growth at a reasonable price (GARP) investing became a lot more difficult in the last decade as valuations expanded and a narrower set of companies were able to generate consistent growth. After the recent derating and with economic transitions underway, we think GARP may find renewed interest,' they say.
They produced this list of 29 stocks they think meet the criteria — on average, the companies trade at 30 times estimated 2025 earnings with a 19% expected return from UBS analysts. Tapping a valuation database called HOLT it inherited from Credit Suisse, the strategists said all of the stocks are in the top half of the market on operational quality, in the top quarter on growth and neither a value trap or too expensive, as well as being over $10 billion in market cap.
The list ranges from well-known companies like Broadcom AVGO to On Holdings ONON, the Swiss sneaker maker backed by tennis star Roger Federer.
Ticker
Name
Industry
2025e PE
2026e PE
Price chg (since 31-Dec)
AVGO
Broadcom Inc
Semiconductors & Semiconductor
32
27
-10%
LLY
Eli Lilly & Co
Pharmaceuticals, Biotechnology
53
43
-2%
CRM
Salesforce Inc
Software & Services
28
25
-16%
NOW
Servicenow Inc
Software & Services
59
49
-8%
INTU
Intuit Inc
Software & Services
34
30
5%
BKNG
Booking Holdings Inc
Consumer Services
24
21
4%
PGR
Progressive Corp
Insurance
18
18
21%
ETN
Eaton Corp Plc
Capital Goods
26
23
-7%
ANET
Arista Networks Inc
Technology Hardware & Equipment
34
29
-21%
APH
Amphenol Corp-Cl A
Technology Hardware & Equipment
30
28
16%
KLAC
Kla Corp
Semiconductors & Semiconductor
22
21
12%
CTAS
Cintas Corp
Commercial & Professional Serv
49
44
18%
EQIX
Equinix Inc
Equity Real Estate Investment
61
54
-8%
CMG
Chipotle Mexican Grill Inc
Consumer Services
42
35
-15%
ADSK
Autodesk Inc
Software & Services
35
30
-2%
HLT
Hilton Worldwide Holdings In
Consumer Services
31
27
-2%
IDXX
Idexx Laboratories Inc
Health Care Equipment & Servic
40
36
19%
HEI
Heico Corp
Capital Goods
60
54
13%
TW
Tradeweb Markets Inc-Class A
Financial Services
43
38
11%
ROL
Rollins Inc
Commercial & Professional Serv
52
46
5%
TYL
Tyler Technologies Inc
Software & Services
50
45
-2%
VLTO
Veralto Corp
Commercial & Professional Serv
26
24
-4%
EME
Emcor Group Inc
Capital Goods
19
17
-3%
RYAN
Ryan Specialty Holdings Inc
Insurance
31
26
9%
ONON
On Holding Ag-Class A
Consumer Durables & Apparel
41
32
-9%
EQH
Equitable Holdings Inc
Financial Services
8
6
18%
BSY
Bentley Systems Inc-Class B
Software & Services
40
35
10%
MANH
Manhattan Associates Inc
Software & Services
41
37
-31%
KNSL
Kinsale Capital Group Inc
Insurance
26
22
-2%
Data: UBS/FactSet/Bloomberg
A big day in financial markets is shaping up: Futures on the Dow YM00 are up more than 1,000 points as S&P 500 ES00 and Nasdaq 100 NQ00 contracts rally. Gold GC00 is tumbling. So are bonds: the yield on the 10-year Treasury BX:TMUBMUSD10Yrose 8 basis points.
Need to Know starts early and is updated until the opening bell, but to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.
Key asset performance
Last
5d
1m
YTD
1y
S&P 500
5659.91
-0.47%
5.53%
-3.77%
8.37%
Nasdaq Composite
17,928.92
-0.27%
7.20%
-7.16%
9.72%
10-year Treasury
4.445
9.60
6.70
-13.10
-4.80
Gold
3219.3
-3.71%
-0.23%
21.98%
37.44%
Oil
62.89
9.89%
2.16%
-12.49%
-20.59%
Data: MarketWatch. Treasury yields change expressed in basis points
The U.S. and China, after trade talks in Geneva, agreed to cut tariffs on each other by 115 percentage points, for at least 90 days. Treasury Secretary Scott Bessent further added that talks on fentanyl, where tariffs on China remain in place, were positive.
President Donald Trump over the weekend said he'll sign an executive order putting 'most favored nation' status on drug prices, a move that's only expected to impact government-run health programs.
Eli Lilly LLY said its Zepbound drug led to superior weight loss than Novo Nordisk's NVO Wegovy in a Phase 3b trial.
Apple AAPL is considering raises prices on the iPhone but won't blame tariffs if it does, according to a Wall Street Journal report.
European defense stocks fell on the possibility of Russia-Ukraine peace talks, in Turkey on Thursday.
India and Pakistan signed a U.S.-brokered ceasefire deal.
Trump administration in talks to accept new Air Force One as gift from Qatar.
Elizabeth Holmes's partner has a new blood-testing start-up.
Chinese EV battery giant CATL aims to raise $4 billion in Hong Kong IPO.
Morgan Stanley plotted this chart of 'inflation' mentions on U.S. corporate conference calls, taken from AlphaSense data, versus the year-over-year inflation rate. The next consumer price index report is due for release on Tuesday.
Here were the most active stock-market tickers as of 6 a.m. Eastern.
Ticker
Security name
TSLA
Tesla
NVDA
Nvidia
GME
GameStop
AAPL
Apple
PLTR
Palantir Technologies
AMZN
Amazon.com
AMD
Advanced Micro Devices
TSM
Taiwan Semiconductor Manufacturing
META
Meta Platforms
MSTR
MicroStrategy
In Alaska, Mother's Day was celebrated with free visits to see these ice-age survivors.
One mother and son celebrated the weekend by each getting master's degrees from Texas Christian University.
A Congressman revealed a secret passage inside the U.S. Capitol that dates back to the 1700s.
As the Dow and S&P claw back their 2025 losses, they're setting up for an extremely rare comeback victory
The bulls are back in town. Goldman and this Wall Street optimist are lifting their S&P 500 targets on tariff relief.
'I am scared to death that I'll run out of money': My wife and I are in our 50s and have $4.4 million. Can we retire early?
'Be vigilant with your finances': My IRA had an unknown beneficiary designation. How could this happen?
My eldest son refused to share his father's $500K inheritance with his siblings. Should I cut him off?
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