Amazon, DocuSign, Morgan Stanley, And More — UBS' Conviction Picks For 2021

UBS Group AG (NYSE: UBS) equity strategist Keith Parker gave the top 10 conviction stock picks for 2021, which, according to him, have an upside potential based on their “exposure to key themes” in 2021, CNBC reports. Parker factored in upside to price target, risk/reward skew, and sector weightings.

Here're are the UBS picks for 2021.

In the financial services sector: Ally Financial Inc (NYSE: ALLY) and Morgan Stanley (NYSE: MS)

Relying on the financial services company’s net interest margin expansion coupled with its asset sensitivity, the UBS analyst anticipates a 24% upside potential for Ally Financial. Other positives include a gradual growth in the asset base, operating leverage, and strong pricing policies.

In October, Morgan Stanley acquired investment management company Eaton Vance Corp (NYSE: EV) for $7 billion. UBS believes the financial services company’s stock has a 17% upside potential.

In the technology sector: Amazon Inc (NASDAQ: AMZN), Micron Technology Inc (NASDAQ: MU), Dell Technologies Inc (NYSE: DELL), and DocuSign Inc (NASDAQ: DOCU)

Amazon has grown in leaps and bounds during the pandemic, and UBS analysts expect the trend to continue in the post-pandemic world. Predicting a 28% upside, UBS analysts weigh heavily on Amazon’s cloud business AWS and expect a significant revenue growth with high margins.

Analyst Eric Sheridan opines that Amazon can benefit from changing customer and enterprise behavior in its e-Commerce segment, media, entertainment business, and digital ads business.

Parker sees Micron Technology, Dell Technologies with an upside potential of 16% and 17%, respectively.

DocuSign stock rallied 220% this year, and analyst Karl Keirstead expects the stock to continue the trend in 2021 with a 29% upside.

In the airline sector: Southwest Airlines Co (NYSE: LUV)

UBS Analysts quoted this stock as the “best way to play a recovery in the US Airlines” and rated Southwest with a 42% upside, the highest among the ten stocks. Despite concerns over the increased COVID-19 infection rates, the UBS Analyst Myles Walton is banking on the vaccine for a faster recovery rate.

Among consumer stocks: Dollar Tree Inc (NASDAQ: DLTR) and Constellation Brands Inc (NYSE: STZ)

UBS analysts like Dollar Tree for its discount segment earnings driver, the Family Dollar. Analyst Micheal Lasser expects the sales to improve due to its consumable products in the short run and store revamps over the long run. Dollar Tree’s upside potential is pegged at 18%.

Analyst Sean King expressed that the wine and beer maker, Constellation Brands, “is undervalued” and holds a 16% upside potential next year.

In healthcare: UBS sees a 31% upside potential for Boston Scientific Corporation (NYSE: BSX).