Trade Deals Boost This Overlooked Strategy
UBS Highlights 29 “Growth at a Reasonable Price” Stocks Amid Shifting Market Uncertainty
Roughly a month after “Liberation Day” and the subsequent flurry of trade tariff announcements, much of the initial drama has subsided. With U.S.–China tariffs largely rolled back, the market’s focus is now shifting from policy uncertainty to uncertainty around the actual outcomes of these changes.
In a fresh note, UBS strategists led by Sean Simonds suggest that while tariff details are now clearer, the bigger question is how these policies will impact the economy going forward. “We may have moved past the peak of uncertainty,” they write, “but what lies ahead is policy outcome uncertainty.”
UBS based its economic outlook on a hypothetical scenario involving a 10% across-the-board tariff and a 60% tariff on Chinese goods—though the real rates are about half that. Still, with industry-specific tariffs, UBS sees its assumptions as a realistic baseline. Under this model, the firm expects U.S. economic growth to slow from 2% year-over-year in Q1 to just 0.7% by Q4.
This uncertain backdrop leads UBS to favor a balanced investment approach: avoid overpaying for overhyped stocks, but don’t shy away from select cyclical growth opportunities. “Elevated but unclear risks support a value tilt, but continued economic momentum into 2026 means maintaining exposure to cyclical growth makes sense,” the team advises.
The recommended strategy? Growth at a reasonable price, or GARP. Though GARP strategies like the Invesco S&P 500 GARP ETF have trailed the broader S&P 500 in recent years, UBS believes the environment may now favor a revival of this approach. “Valuations expanded over the last decade while fewer companies consistently delivered growth, making GARP harder. But after the recent valuation reset and ongoing economic transitions, GARP could be due for a comeback.”
UBS identified 29 stocks that meet its GARP criteria. These companies, with market caps above $10 billion, trade at an average of 30 times projected 2025 earnings and carry a 19% upside potential according to UBS analysts. The list, generated using the HOLT valuation tool inherited from Credit Suisse, screens for high operational quality (top 50% of the market), strong growth (top 25%), and excludes names that are either value traps or overly expensive.
The roster includes familiar names like Broadcom (AVGO) and lesser-known plays like Swiss footwear brand On Holdings (ONON), backed by tennis icon Roger Federer.
