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Stocks roared back from the coronavirus crisis in the second quarter but finding return in the third quarter could be more challenging with rampant uncertainty.
An uptick in coronavirus cases in the U.S., uneven economic data and a presidential election are all likely to cause market volatility, making individual stock picks likely harder to come by.
"Given the heightened uncertainty in the market, we have skewed toward high operational quality ideas this quarter." Credit Suisse HOLT specialist John Talbott said in a note to clients.
Credit Suisse HOLT made a list of top stock picks going into the third quarter. The firm chooses companies with "superior quality, valuation and momentum attributes." The analysts use a Credit Suisse propriety calculation to help find these stocks, called the cash flow return on investment, which essentially looks at how much cash the company is generating above the cost of capital and financing.
The firm's HOLT team has a strong track record as its top second quarter picks beat their respective industries. The second quarter group were up about 1% on average compared to their sector peers.
Take a look at Credit Suisse's top picks for the third quarter.