UBS: Buy these 40 cheap defensive stocks that will continue to outperform as the economy heads toward a recession
Stocks weren't swayed by the soft GDP growth, just as they haven't been weighed down much lately byBut under the surface, UBS sees a worrying sign that many in markets are overlooking: economically sensitive stocks are drastically underperforming their recession-resistant peers.In bear markets that precede downturns, cyclicals have historically lagged defensives by 22% from peak to trough, wrote Sean Simonds, an associate strategist at UBS, in an April 28 note.
First, despite how poorly cyclicals have done compared to defensives lately, a pair of UBS indicators imply that their performance should actually be far worse. The recent decline in the ISM Manufacturing index implies that cyclicals will drop even more relative to defensives.Cyclicals have also fared 8% to 9% better than expected compared to defensives in the last six months after accounting for macroeconomic drivers, a UBS machine learning model found.Second, valuations for cyclicals relative to defensives remain slightly above the long-term average and are expected to fall over one standard deviation before the bear market is over.
Instead, investors should target inexpensive defensive stocks since they're much more appealing than their pricey peers when the economy weakens.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Organic Foods Guide: When To Buy (or Not Buy) OrganicWhat health benefits can organic foods offer? What organic foods have the best nutrition, and when are supermarket standards fine? Learn about milk, beef, apples, bananas, and more. Learn what fruits and vegetables have the most pesticides according to FDA reports.
Read more »
The debate over banning TikTok is poisoned by anti-Asian rhetoricInsider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Read more »
I work remotely from vacation rentals and pay less than a mortgageI work remotely from vacation rentals. It's cheaper than rent or a mortgage — here's how I find good deals and choose where to go next.
Read more »
US GDP grew 1.1% in Q1 2023, per Bureau of Economic AnalysisInsider tells the global tech, finance, markets, media, healthcare, and strategy stories you want to know.
Read more »
12 investments to make with stocks stuck in a rut: ChartmasterMake these 12 investments with strong technical set ups right now while the broader market faces the risk of a 'climactic bear scenario,' according to a longtime chartmaster
Read more »