UBS analyst Jonathan Golub and his team are out with note Thursday saying that the market’s consensus expectations for first-quarter earnings are too conservative vesus the strength of the economic recovery in the U.S.
“As a result, we believe that the market is set-up for another round of very strong reports
relative to expectations throughout the remainder of 1Q earnings season,” UBS writes. The Swiss bank especially likes so-called “cyclical” names, which are supposed to bounce more as the economy gains steam. Here’s a look at their “best ideas.”:
Union Pacific: “Among the transports we think Union Pacific has the most potential to report a blow out quarter in Q1 given consensus likely underestimates the operating leverage benefits into the volume recovery, which began in December.”
Devon Energy: “Given higher than expected proceeds, a net debt-free balance sheet, and a discount valuation relative to peers, we believe DVN may disclose a meaningful share repurchase program (over $3 billion).”