5 stocks with strong pricing power to buy according to UBS

13 avril 2022

UBS highlighted companies that have pricing power to protect their profits.

Pricing power refers to a firm's ability to raise prices without losing customers. Firms with pricing power tend to withstand periods of inflation better than their competitors because they can pass on rising costs to customers.

Yesterday, the publication of the consumer price index in the United States showed an increase of 8.5% on an annual basis, an unprecedented level. "We expect companies with strong pricing power to continue their outperformance. The combination of high inflation and a shift to a later cycle environment should be a significant catalyst."

5 stocks with strong pricing power to buy

Apple (NASDAQ:AAPL), maker of the iPhone, "has been able to maintain and increase prices. End-market demand has improved year-over-year, leading to high 'wait times' despite increased purchases and production of products". The stock is expected to have a fair value of $162.29 on average according to the Investing Pro model, representing a downside risk of 4.4%. The stock price is at the top of its 52-week range posing a downside risk. Analysts expect an average price of 191.20 dollars with a range between 130 and 226 dollars.

Nike (NYSE:NKE) Sporting goods maker is said to have pricing power thanks to the strength of its brand. “The Nike brand currently holds the No. 1 position in terms of brand awareness globally and the company has significant leeway to reduce its promotions.” The stock is expected to have a fair value of $139.43 on average according to the Investing Pro model, representing an upside potential of 9.8%. The stock price is at the bottom of its 52-week range offering upside potential. Analysts expect an average price of 167.22 dollars with a range between 133 and 195 dollars.

Deere (NYSE:DE) Farm equipment maker is the leader in the agricultural industry and is "highly valued by farmers. Strong demand, coupled with soaring prices for used farm equipment, gives Deere some power negotiation". The stock is expected to have a fair value of $430.90 on average according to the Investing Pro model, representing an upside potential of 1.8%. The stock price is at the top of its 52-week range posing a downside risk. Analysts expect an average price of $437.97 with a range between $288 and $487.

Nucor (NYSE:NUE), a maker of steel products, is expected to fair value $177.93 on average according to the Investing Pro model, or upside potential of 11.5%. The stock price is at its 52-week range high posing a downside risk. Analysts expect an average price of $127.82 with a range between $100 and $160.

NVIDIA (NASDAQ:NVDA) Graphics card maker is expected to fair value $222.96 on average based on the Investing Pro model, or 0.8% upside potential. The stock price is in the middle of its 52-week range. Analysts expect an average price of $334.03 with a range between $200 and $410.