The outlook for stocks is becoming more favorable as inflation slows and the Federal Reserve looks to cut interest rates by year-end, 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 to 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, or 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 pa.