Semiconductors and more: UBS lists its best ideas to beat the market

Published Sun, Sep 5 20217:30 PM EDT

Lucy Handley @in/lucy-handley-b2b0a61a/@lucyhandley

Analysts at investment bank UBS have listed a raft of top global stock picks in markets including Asia, Australia, and Europe, with its "highest ranked" companies including those in semiconductors, technology and health care. In a research note published Sept. 2, the bank used a variety of models to assess and rank stocks, including analysis of fundamentals such as free cashflow yield — a higher number here suggests a firm has ample money to pay dividends as well as clear debts. The analysts also used a machine-learning technique called "random forests," which they said automatically adapts to changing market conditions to predict stock returns. The note, written by UBS analysts led by Paul Winter, detailed the bank's "best style ideas." The analysts stated: "UBS presents our best regional alpha ideas in one place. For each model we show recent performance, and the highest- and lowest-ranked picks for that idea." Alpha is a term that investors use to indicate market-beating returns. "For Australia and Europe we present a combined screen showing our 50 best picks drawn from an average ranking across the models," the analysts said. In its Australian list, diagnostics company Sonic Healthcare ranked first, while in Europe steel firm Voestalpine came top. Other high-ranking European firms included insurance company Admiral Group , French giants LVMH and L'Oreal and Swiss freight firm Kuehne & Nagel . Three health care firms also rank in the top 10 European firms: German company Merck KGaA , French firm Sartorius and Italian group DiaSorin . In technology, high ranking stocks include semiconductor supplier ASML and autonomous software firm Hexagon . On its Australian list, biotech company CSL , container manufacturer Brambles and mobile network Telstra are among the top 10, while mining firm BHP , drinks company Treasury Wine Estates and packaging firm Amcor also rank highly. For Asia (excluding Japan), the bank's top-ranking company is China's Luxi Chemical Corp . This was followed by oil firm PetroChina , Taiwanese semiconductor company United Microelectronics and Hong Kong-headquartered auto supplier Xinyi Glass . Semiconductor supplier Powertech Technology , auto firm Kia and Taiwanese firm Formosa Plastics also make the top 10.

Semiconductor manufacturing facility.

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