Top global stock picks for the second half, according to UBS

The outlook for stocks is becoming more favorable as inflation slows and the Federal Reserve looks to cut interest rates by yearend, according to UBS. But with a “considerable amount” of optimism already priced in, the risk-reward that the market rally will continue is limited, according to the Swiss bank’s chief investment office. Against that backdrop, UBS thinks investors should maintain a neutral view and remain strategic in their stock allocations. The firm believes a portfolio of 20-25 stocks allows for ample diversification while still remaining selective. For the second half of the year, UBS has identified 24 stocks in a global list of top picks, all of which are the firm’s highest-conviction ideas whose performance is benchmarked to the MSCI All Country World index – which has gained more than 12% in 2024. Here are some of the stocks on the UBS list: One of the stocks added to the list was San Diego-based, medical device maker Dexcom . With shares down more than 9% year to date, UBS sees an attractive entry point following the pullback. Despite growth in the continuous glucose monitoring (CGM) segment of the diabetes market over the past few years, the sizable diabetes market has a “relatively low” penetration rate, according to UBS. This means a “long growth runway” remains in store as adoption increases. “The global CGM market has grown consistently over recent years, and we believe the addressable CGM market will continue to expand over the next decade as payers recognize the benefits within a broader population of diabetes patients,” analyst Eric Potoker wrote in the note. “We expect DXCM to remain a leading player within the very concentrated CGM market.” UBS also recommends casino and lodging operator MGM Resorts , citing its strength in Las Vegas and healthy outlook, especially in its convention business. UBS also expects increased event activity due to the impact that the Super Bowl, Formula 1 and the Sphere venue have all had on Las Vegas. Samsung also made the UBS recommended list, with the bank viewing the company as a 5G smartphone leader that’s likely to see strong earnings growth in the next few quarters. UBS cited improving memory chip prices and stronger guidance on high bandwidth memory (HBM) shipments as catalysts. On Wednesday, Samsung launched its Galaxy Ring – a lightweight ring designed to monitor health vital signs 24 hours a day – as a way to integrate its products, which could help drive sales to those other products, especially smartphones. Ralph Lauren was named as a favorite by UBS due to its brand elevation strategy. On a forward 1-year basis, the stock is trading at a multiple of 16.4 times earnings, according to FactSet, and UBS views the company as attractively valued. Shares are up more than 27% in 2024.