Buy UBS in Jan 2024. Sell UBS by Dec 2024 and Profit?
2024 is almost at the doorstep!
I feel this is the best time to do some reading & get smart about making good investments for the new year.
While we do that, we should also take stock of our current investments and see if a rebalance is required.
In this post, I am finding out, what is $Morningstar(MORN)$ views on what to invest in 2024.
For 2024, Morningstar is cautiously optimistic about stocks & bonds, even after accounting for heightened risk.
Analysis summary.
On equities, Morningstar sees opportunities based on following factors — size, style, sector and country exposures.
According to their analysis, targeted exposure is well placed to beat broad market-weight exposure.
Equity Opportunities
(1) Smaller-capitalization value stocks stand out, among the basket of undervalued and unloved assets.
(2) Cyclical sectors:
Financials (namely banks), stand out as attractive.
For economically sensitive sectors, communication services remain appealing.
For defensive sectors, healthcare & utilities offer a ballast with upside potential.
(3) Global players:
UK stock market.
Emerging market (stocks only).
Chinese technology (stocks).
** Alert: above recommendations are very volatile investments that could be worth the risks, but sizing is crucial.
(4) 2nd-derivative artificial intelligence plays, primarily in the US market, could offer an earnings tailwind.
Morningstar - equities recommendations
Above table summarizes Morningstar’s view of 2024 winning equities sectors. (see above)
My viewpoints: (mine & mine only)
Last week, over 3 posts, I have shared Barron’s 2024 stock recommendations in details.
What I want to achieve here:
Compare both veterans’ (Barron’s and Morningstar) recommendations.
Identify the “common” entries.
Barron’s 10 recommendations, (pay attention to the stocks’ sectors)
Morningstar’s recommendations:
Sectors - 3 picks where Barron's & Morningstar see eye to eye:
Financial services.
Communication services.
Healthcare.
Making sense of the recommendations:
There are easily 6,000 companies or more (don’t quote me - hee hee) listed on the US stock exchange.
Below are stocks based on Barron’s and Morningstar “recommended” sectors that I like.
You may not like them (it is perfectly okay ),
(1) Financials sector.
$UBS Group AG(UBS)$. Based on news report) it looks like USB is the “red” after Credit Suisse takeover, I believe this is temporary and will blow over.
(2) Communication Services sector.
$Alphabet(GOOG)$, is not exactly small-cap stock, but its use and innovation on AI is undeniable and unstoppable.
(3) Healthcare sector.
$BioNTech SE(BNTX)$. I will be doing my homework on this “biotech” stock. There maybe potentials in the horizon.
(4) Second derivative with AI play sector.
$Palantir Technologies Inc.(PLTR)$. There are a handful of US stocks where its product’s application slant towards AI is too obvious to be ignored. Palantir is one of those.
Due to real estate limits, this post focuses on Swiss bank - UBS Group.
Why UBS is a 2024 bullseye?
Below are salient reasons why UBS will continue to flourish into 2024.
(1) Credit Suisse Merger Boost: The 2024 completion of the Credit Suisse acquisition would solidify UBS's position as Switzerland's dominant bank - domestically & internationally, increasing market share and potentially unlocking cost synergies.
(2) Wealth Management Prowess: UBS boasts a leading global wealth management platform, catering to high-net-worth individuals.
This segment is expected to remain resilient in volatile markets, offering a stable revenue stream.
(3) Investment Banking Growth: The bank's investment banking arm has shown strong performance in recent quarters, capitalizing on increased M&A activity and IPOs.
This momentum could continue in 2024, especially when economic conditions improve.
(4) Focus on Sustainable Investing: UBS is actively positioning itself as a leader in sustainable and impact investing, a rapidly growing market segment attracting investor interest.
UBS Q3 2023 results.
Total group Revenue was $11.7 Billion, up +23% from $9.54 Billion in Q2 2023.
Operating profit (before tax) : $844 Million, well ahead of market expectations.
CET1 capital ratio, a measure of bank liquidity, was 14.4%, unchanged from the previous quarter.
Credit Suisse Wealth Management generated positive net new money inflows for the first time since the first quarter of 2022, contributing to inflows of $22 Billion for UBS Global Wealth Management.
UBS after Credit Suisse merger.
In June 2023, Credit Suisse was delisted from all stock exchanges, when it merged with UBS Group.
Since then, there have been many progresses reported.
In September 2023, UBS reported net new deposits of $33 Billion across its (a) Global Wealth Management and (b) Personal & Corporate Banking (P&C) divisions.
$22 Billion of the $33 Billion, came from Credit Suisse clients. This implies UBS is able to retain most, if not all of Credit Suisse clients.
UBS is making steady progress to fully integrate Credit Suisse into UBS Group.
It is on target to achieve gross cost savings of at least $10 Billion by 2026, when it completes the integration all of Credit Suisse Group’s businesses.
When Credit Suisse was delisted on 12 Jun 2023, UBS stock price was $20.29 per share.
6 months on, when US market closed on Fri, 29 Dec 2023, USB stock price was $30.90 per share; a gain of +62.97%.
Is there anything not to like about UBS, the largest Swiss banking institution and the largest private bank in the world?
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Do you think you will be interested in the Sectors recommended by Morningstar?
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Excellent insight into UBS and what it can offer in a short term horizon within 12 months. Worth keeping a close eye on UBS.
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UBS
Interesting