UBS Quality Growth at a Reasonable Price Dominated by 4 Top Technology Picks

Technology

Published: April 11, 2016 10:25 am

Last Updated: January 13, 2020 10:56 am

With the market in the midst, at least so far, of yet another flat-to-down year, investors are starting to wonder which is the best investment route to take. One thing is for sure, almost all the top brokerages on Wall Street are still very positive on the large and mega cap stocks, with few overly bullish on the smaller cap counterparts.

For some time we have tracked the success of the UBS Quality Growth at a Reasonable Price (Q-GARP) portfolio, and for one very good reason. On a total return basis, since inception on May 31, 2007, the list has outperformed the S&P 500 by 67.5%, rising 129.5% versus a 62.0% gain for the S&P 500 index. The portfolio is built by using an initial quantitative screen of stocks based on: 1) quality metrics—high and stable profitability, 2) growth—high expected earnings growth, and 3) valuation— low valuation relative to peers. The final list is a compilation of quality growth stocks that the analysts at UBS believe are trading at attractive valuations.

We completed a first-quarter review and found four top technology companies in the portfolio that make good sense for more aggressive growth investors going forward.

Adobe Systems

This high-profile old-school software company was added to the Q-GARP list in February and also resides on the firm’s Equity Focus list. Adobe Systems Inc. (NASDAQ: ADBE) operates in three segments. The Digital Media segment provides tools and solutions that enable individuals, small and medium businesses, and enterprises to create, publish, promote and monetize their digital content.

The Digital Marketing segment offers solutions for how digital advertising and marketing are created, managed, executed, measured and optimized. This segment provides analytics, social marketing, targeting, media optimization, digital experience management and cross-channel campaign management solutions, as well as video delivery and monetization to digital marketers, advertisers, publishers, merchandisers, Web analysts, chief marketing officers, chief information officers and chief revenue officers.

The Print and Publishing segment offers products and services, such as eLearning solutions, technical document publishing, Web application development and high-end printing, as well as publishing needs of technical and business and original equipment manufacturers (OEMs) printing businesses.

Adobe is also reasonably safe route for investors looking to own a company with Marketing Automation product, which has become huge.

The Thomson/First Call consensus price target for the stock is $109. Shares closed on Friday at $94.07.