Top rated and bottom rated stocks according to 3 key drivers of performance – UBS

UBS analysts listed top and bottom-ranked stocks based on a key set of drivers for equities, they named REVS.

UBS’s REVS framework consists of elements that are key drivers for equity performance, including macro regime – the “potential performance for each country, industry group and style based on their performance in a similar regime distribution in the past,” – earnings trends and surprises, what’s priced into valuations already, and changes in investors’ sentiment.

“The market is still expecting very strong (>15%) growth from semis (SMH), (SOXX), pharma (PJP), (XPH), (PPH) and media (SOCL), (GGME), (XHYT) companies,” said Gerry Fowler, head of U.S. and European Equity and Derivative Strategy at UBS.

Also, the broad S&P 500 (SP500), which is expensive on a forward P/E of >22x, “is still expected to grow close to 10% in 2025.”

In addition, he said that late-cycle cyclicals and some growth defensive companies top these rankings, including communication services (XLC), technology (XLK), utilities (XLU) and industrials (XLI).

Earnings revisions have stabilized “with downgrades concentrated in just a few consumer-oriented industry groups” such as autos and durables, which are most impacted by tariffs, Fowler added.

“We think that modern market structures like buybacks and reliable flows from global pension savings schemes contribute to the 'momentum,'” he said. “If earnings expectations weaken further and especially if hard data/jobs begin to weaken faster, there could be more sellers, but there are strong arguments that this market structure continues to limit U.S. equity downside unless something seismic happens to upset these trends.”

Here are the top-rated stocks, according to UBS’s REVS methodology:

• Philip Morris International (PM) – REVS score: 1.79
• Exelixis (EXEL) – REVS score: 1.64
• Broadcom (AVGO) – REVS score: 1.59
• Pure Storage (PSTG) – REVS score: 1.44
• Ingredion (INGR) – REVS score: 1.38
• Qualys (QLYS) – REVS score: 1.38
• Lumentum Holdings (LITE) – REVS score: 1.36
• Houlihan Lokey (HLI) – REVS score: 1.34
• Premier Inc (PINC) – REVS score: 1.34
• CVS Health (CVS) – REVS score: 1.30
• Chimera Investment (CIM) – REVS score: 1.29
• Intercontinental Exchange (ICE) – REVS score: 1.27
• Oracle (ORCL) – REVS score: 1.27
• Signet Jewelers (SIG) – REVS score: 1.26
• Hewlett Packard Enterprise (HPE) – REVS score: 1.25
• Gates Industrial (GTES) – REVS score: 1.23
• Root Inc. (ROOT) – REVS score: 1.20
• Meta Platforms (META) – REVS score: 1.20
• Fox Corp (FOXA) – REVS score: 1.19

And here are bottom-rated ones:

• Frontier Group (ULCC) – REVS score: -1.31
• JetBlue Airways (JBLU) – REVS score: -1.35
• Booz Allen Hamilton (BAH) – REVS score: -1.36
• Iovance Biotherapeutics (IOVA) – REVS score: -1.36
• Fluence Energy (FLNC) – REVS score: -1.38
• Tronox Holdings (TROX) – REVS score: -1.42
• Alexandria Real Estate (ARE) – REVS score: -1.43
• Huntsman (HUN) – REVS score: -1.45
• Green Plains (GPRE) – REVS score: -1.45
• Axsome Therapeutics (AXSM) – REVS score: -1.45
• Warrior Met Coal (HCC) – REVS score: -1.52
• Coherus Oncology (CHRS) – REVS score: -1.53
• Heartland Express (HTLD) – REVS score: -1.55
• Jeld-Wen Holding (JELD) – REVS score: -1.59
• Teladoc Health (TDOC) – REVS score: -1.63
• Dow (DOW) – REVS score: -1.63
• Polaris (PII) – REVS score: -1.66
• Lennar (LEN) – REVS score: -1.67
• Caesars Entertainment (CZR) – REVS score: -1.68
• Westlake (WLK) – REVS score: -2.06