Watch these compounder stocks that can grow no matter the economic cycle, UBS says.
As inflation concerns remain at the forefront of investors' minds, UBS is eyeing stocks that can find growth no matter the economic cycle. "We define compounders as all-weather stocks that leverage operational excellence and competitive advantages to grow through any phase of the economic cycle," analyst Joseph Parkhill wrote on Tuesday. S & P 500 stocks are trading near all-time-high valuations of 20 times price to earnings and 14 times enterprise value/EBITDA, Parkhill said.
mountain Amazon stock. The analyst said shares can find strong growth thanks to expected margin expansion in e-commerce, Amazon Web Services growth picking up at a faster-than-expected clip and added revenue from advertising on Prime Video. "These factors should ultimately drive faster gross profit versus operating expense growth to drive double-digit EBITDA growth over the next several years," Ju added. Ugg and Hoka maker Deckers Outdoor also made the cut.
mountain Deckers shares over the past year. "Hoka is one of the world's fastest growing footwear brands," Sole said. "We believe Hoka's exceptional momentum with consumers continues and think this will lead to strong FY25 sales growth and stock-driving earnings beats." Stocks also on the UBS list include artificial intelligence plays Microsoft and Broadcom .
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