UBS ‘quantimental’ framework identifies a surprise U.S. company as its highest ranking stock
United States growth companies are killing it, according to a report published today by Zurich-based UBS. Titled ‘Theme-ometer,’ the report includes a list of 20 companies that rank highest and 20 ranked lowest, based on the bank’s proprietary “quantimental stock selection framework” that breaks down company performance into four categories: the macro economic regime (R), the operating environment for earnings (E), the market assessment of valuations (V), and by sentiment (S).
That’s REVS for short.
Six of the top seven highest ranked companies to make the UBS list are from the U.S. They include Fortinet, a 24-year-old cybersecurity company that has grown explosively since Covid caused the work-from-home population to balloon. Its stock price grew by 34.25% over the past year alone, to $79.89 today. Only Madrid-based Endesa, an electric company in UBS’s EU Listed Eurozone Exposure theme out-ranked the other six U.S. companies.
Of note, as with most bank research, UBS “does and seeks to do business with companies covered in its research reports,” according to the report, so as always, a degree of caution is necessary when interpreting the results.
“The US Growth theme is among the highest ranking in our REVS framework,” wrote lead author, and UBS U.S. strategist, Sean Simonds, and the rest his team. Other U.S. Growth leaders were Meta, Docusign, Monday.com, Uber and Cardinal Health.
The quantimental stock selection framework gives companies a weighted score, with 30% based on the macro economic regime (or the larger economic context), 30% going to earnings, 15% going to valuations and 25% going to sentiment, according to Simonds in an email to Fortune.
Sunnyvale, California-based Fortinet scored a 0.63 out of a perfect score of one. Endesa, the Madrid based utility, came in second with a score of 0.61.
Founded by brothers Ken and Michael Xie in 2000, Fortinet was a slow grower for its first 20 years, climbing to $23.62 as of November 2020. That month, as Covid quarantine forced clients to stay home, the stock started a year of nearly non-stop growth, hitting $69 in December 2021.
In August, Fortinet bought artificial intelligence cloud security firm Lacework for an undisclosed amount, and is currently valued at $61.4 billion.
Other themes ranked highly by UBS were EU Listed Eurozone Exposure, GLP-1 Winner (tracking the industry around the Glucagon-like peptides in Ozempic), and EU Renewables. The worst performing themes included European Value stocks such as BP, Listed China Exposure, including L’Oreal, and U.S. Low Income Consumer, including Monster Beverage, Autozone, and Dollar General, all of which “are among the lowest scoring stocks in these themes,” according to the report.
https://www.darkreading.com/cloud-security/fortinet-customer-data-breach-third-party
