Investors who fear that they have missed a rally or growth in the stock markets can still collect solid profits from the purchase of US mid-cap stocks. According to MarketWatch, this is stated by the global asset management division of UBS Global Wealth Management.
UBS Bank, one of the largest Swiss banks, sees the further development of US stocks positively. This is mainly due to strong and healthy economic growth, but also due to solid profits and low bond yields.
“After stock markets set new and new highs, markets tend to continue to grow positively,” said Mark Haefele, head of investment at UBS Global Wealth Management, looking ahead to next year.
The US stock index S&P 500, which includes the shares of the 500 largest listed companies in the United States, continues to grow this year after a long increase in its highs, and this growth lasted until November this year. In its outlook, UBS notes that the S&P 500, one of the world’s most important stock indices, has averaged 11.9 percent over the past 12 months.
According to the bank, the stock market in the United States really strengthened significantly after rebounding from last year’s March low during the coronavirus pandemic. Since then, US stocks have added more than 70 percent. However, this sharp growth has raised some concerns and nervousness among investors about “exaggerated” valuations and the risk of a possible correction.
“For investors who hold excess cash but who are also afraid of the bad timing of the market entry, there are some defensive approaches to entering the market,” the Zurich-based bank said in a report. “Investors can set a specific schedule for their investments, such as buying after market correction or allocating their funds to dynamic assets,” says UBS Global Wealth Management.
Opportunities in the eurozone and Japan
The Swiss bank expects economic growth to continue in the first half of next year. “In our opinion, shares in the eurozone and Japan could benefit, but also mid-cap stocks in the United States, global financials and stocks in the commodity and energy sectors,” UBS said in a report.
UBS further states that mid-cap US stocks provide investors with a certain balance, which is currently attractive given that the transition from high growth to slower growth is taking place.
In terms of earnings growth, according to UBS, the shares included in the Russell Midcap index outperformed large-cap stocks, even though they are trading at around a 20 percent valuation discount, the highest in 15 years.
“We expect revenue to continue to grow at the beginning of the year as consumers begin to spend their excessive savings,” UBS said next year. “We also think that companies’ spending will play a greater role in increasing returns during the year, as companies will expand capacity, renew inventory and also focus on increasing market share,” the Swiss bank concluded.