UBS says get defensive as global growth disappoints. Gives stocks to buy

As global growth continues to slow, investors should get overweight on defensive names, according to UBS. August marked yet another month of declining global growth, as the Global Manufacturing Purchasing Managers’ Index (PMI) reported 49.5 for the month , down from 49.7 in July, according to S & P Global Market Intelligence. That marks the second consecutive month with a reading below 50 – the breakeven threshold for activity – and indicative of a contraction. U.S. factories in August also saw another month of slowing . The Institute for Supply Management monthly survey of purchasing managers found that 47.2% said they expanded, lower than the Dow Jones consensus estimate of 47.9%. This comes as the Federal Reserve is expected to cut interest rates at its policy meeting this week. Though UBS doesn’t see a hard landing, the firm is remaining defensive, eyeing key areas such as utilities and pharmaceuticals. Of those areas, it upgraded household products to overweight and downgraded tobacco to benchmark. Below are some of the names on that list. In the utilities space – one of the top sectors in the S & P 500, touting a 24% gain in 2024 – Constellation Energy made the list of U.S. buy-rated defensive names. Wall Street has taken a bullish stance, as 12 of the 18 analysts covering the stock have issued strong buy or buy ratings, according to LSEG. The stock has an average price target of $220.03, which implies more than 10% upside from Monday’s close. Constellation Energy has also been on a monster run this year, with shares surging 70%. The stock finished higher by 1.7% on Monday, posting a six-day winning streak. CEG YTD mountain Constellation Energy, year-to-date Eli Lilly was one of the defensive pharmaceutical stocks that made the list, and the Street is even more bullish on that name. About 82% of the analysts covering the stock rate it a buy or strong buy, according to LSEG. The stock has an average price target of $1,003.35, implying upside of more than 8%, as of Monday’s close. Like Constellation, Eli Lilly has also seen massive gains this year. The stock has surged 58% year to date, powered by demand for its blockbuster diabetes treatment Mounjaro and weight loss drug Zepbound. Last Thursday, the company said it’s going to invest $1.8 billion to expand manufacturing for its Alzheimer’s drug as well as for its weight loss and diabetes treatments in Ireland. For equity real estate investment, Extra Space Storage made the cut. That stock has surged nearly 11% in 2024.