UBS says high quality outperforms in recessions — 10 such stocks on sale

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Value outperformed growth and quality this year as rising rates dominated returns, but in 2023, rate sensitivities will be a bigger theme, according to UBS.

Look to cheap high-quality stocks to manage recession risk in the new year, according to UBS. In 2023, resilience should be a key theme for investors as the Federal Reserve's tightening leads to falling inflation and an oncoming economic downturn, the bank said. "Our analysis of styles around recession since '65 shows notable upside for quality, momentum and large over small, with value dependent on financial conditions," UBS strategist Keith Parker said in the note.

Here are 10 of the stocks: One of the highest-quality stocks on the list is cosmetics retailer Ulta Beauty , in the 99.1 percentile. Last week, the company's quarterly results surpassed Wall Street's expectations , and Ulta boosted its earnings and revenue outlook. It's up 15% this year. Tied with Ulta is the software company Cadence Design Systems , also in the 99th percentile for quality.

 

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