UBS Goes Cyclical In "12 Stock" List

UBS strategist George Vasic has made some changes to his "12 stock" list, moving away from the defensive stance adopted three months ago in the wake of this summer's market lapse, replacing it with more cyclical choices.

"The market reaction unsurprisingly saw cyclicals hardest hit, with the industrials the biggest loser (among major groups) since the July 19 peak, while defensives generally performed much better, " Mr. Vasic said in a note to clients.

"Indeed, our two most defensive picks, Shoppers and Tim Hortons (THI) are up 8% and 5%, respectively, since mid-July (with the TSX down 3%) and so we think it is an opportune time to move to stocks that have been relatively harder hit."

In are CAE Inc., (CAE/TSX) Canadian Tire Corp., (CTC/TSX) and Rogers Communications Inc. (RCIb/TSX) which Mr. Vasic told clients are down 10%, 9% and 7%, respectively since July 19, 2007.

Out are Tim Hortons Inc., Shoppers Drug Mart Corp. (SC/TSX) and Thomson Corp. (TOC) which was down which 6% from its July 19 level.

Mr. Vasic also added Kinross Gold Corp. (KGC) to replace Teck Cominco Ltd. (TCK) and EnCana Corp. (ECA) to replace Canadian Natural Resources Ltd (CNQ/TSX).

The "12 stock" list is intended to be roughly sector neutral and will spread to investors who wish to have exposure to UBS's best larger-cap choices relative a TSX 60 benchmark.