A handful of stocks may be due for some gains, even as the market sells off. On Thursday, the Dow Jones Industrial Average dropped nearly 500 points over fears of a recession. The other major indexes followed suit, with the broad market S & P 500 and the tech-heavy Nasdaq Composite sliding along with it. The sell-off accelerated on Friday after a weak jobs report reinforced investors’ worst fears. This follows a rotation away from megacap technology names and into small caps that began last month. The Russell 2000 index gained more than 7% over the past month. By comparison, CNBC’s Magnificent 7 index dropped more than 4% during the same period. Against that backdrop, UBS unveiled its top picks as August begins. The firm added three new names to the list from the industrials and materials sectors, including Freeport-McMoRan and Norfolk Southern . Here are a few names on that “most preferred” list: In materials, Air Products and Chemicals made the cut, with shares up about 5% this year. The stock jumped around 9% during Thursday’s trading session after beating third-quarter earnings estimates. UBS said Air Products is at “the forefront of the energy transition,” citing the progress it is making on large “blue” and “green” hydrogen projects. As completion nears, long-term contracts are being completed, which reduces the risk for the stock. “In our view, the traditional industrial gas business alone is worth the current market price, providing free optionality on the blue/green hydrogen book,” said Nathaniel Gabriel, an equity strategist at UBS. Boeing is one of the industrials names on the list. Shares of the airline maker are down more than 31% this year following heightened regulatory scrutiny after a door plug blew out on an Alaska Airlines Boeing 737 Max 9 flight earlier in 2024. UBS said the company’s deliveries and cash flow are poised for improvement. “While some hurdles remain, Boeing has cleared others, such as the plea with the DOJ, agreement to acquire Spirit Aerosystems and improvement in production with less ‘traveled’ (i.e., incomplete) work,” the analyst said. Gabriel also said the recent appointment of Robert “Kelly” Ortberg to CEO “may spur cultural change and improved accountability.” A pick that was already on the list is Meta Platforms . Shares popped nearly 5% Thursday after the company surpassed Wall Street’s expectations for the second quarter. Meta is trading at a multiple of 23 times earnings on a forward price-to-earnings basis, per FactSet, and UBS sees shares as attractively valued. The stock is up more than 40% this year. Moving into 2025, the firm expects Meta to see an increase in growth and profitability because of product improvements and restructuring, among other factors. “Looking ahead, there [are] more monetization levers to pull on,” Gabriel wrote. “The company should benefit from healthy user engagement, improving monetization of Reels, and longer-term monetization of Instagram and WhatsApp offer longer-term opportunities.”
Here are the top stocks to own right now, according to UBS
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