2 Great Tech Stocks Added to UBS Quality Growth Portfolio
This company was hit hard during the August sell-off, but it has roared back since and is added to the Q-GARP line up. Accenture PLC (NYSE: ACN) is a leading global professional services company that provides a broad range of services and solutions in strategy, consulting, digital, technology and operations. It combines unmatched experience and specialized skills across more than 40 industries and all business functions, underpinned by the world’s largest delivery network.
UBS notes that Accenture is a leader in information technology (IT) services and should deliver solid and consistent earnings growth over the next few years as it is well positioned to benefit from solid global IT spending trends and the migration of corporate and government IT infrastructure to the cloud.
The company recently announced it is launching five advanced analytics applications for the resources industries, which include utilities, oil and gas, chemicals and metals and mining companies, to enable insight-driven decision making for improved business outcomes. The new analytics applications are designed to support pricing, risk management, energy trading, credit collection and workforce planning decisions.
Accenture shareholders receive a solid 2.15% dividend. The consensus price target is $106.68. Shares closed Monday at $106.33.
This top technology stock makes its debut on the Q-GARP portfolio. Red Hat Inc. (NYSE: RHT) is the world’s leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training and consulting services.
While the UBS team acknowledges that Red Hat trades at a high valuation of 37 times 12-month forward earnings estimates, which is way above the average P/E for stocks in the Q-GARP list of about 19 times, they went ahead and added the stock. The analysts think that Red Hat is well positioned to benefit from market share gains of the open source Linux operating system over time
The company also recently formed a partnership with once bitter rival Microsoft that would bring more flexibility to hybrid cloud enterprise environments. Specifically, the partnership allows cloud products running under the Linux operating system to integrate with Microsoft’s cloud computing platform Azure, a huge move after years of competition.
The consensus price target for the stock is set at $84.23. The shares ended Monday at $79.09.
The Q-GARP portfolio has outperformed the S&P 500 by over 5% year to date, and there’s no reason to think that the performance will not carry through and continue in 2016. Strong growth ideas that aren’t overvalued are always among the most sought after on Wall Street.