Buy these 30 stocks with ‘best-in-class’ fundamentals and cheaper valuations that will help them dominate the market, Credit Suisse says

  • Credit Suisse says these stocks offer the greatest returns by generating the most wealth.
  • The firm replaced almost half the stocks on its top 30 list as the third quarter began.
  • It says these companies have better quality and price characteristics than the broader market does.
  • See more stories on Insider’s business page.

2021 is mostly over, and Credit Suisse has decided that it’s out with the old and in with the new.

In its pursuit of the companies that will deliver the most efficient returns, Credit Suisse has revamped its list of top ideas for the third quarter and replaced 13 of the 30 stocks from last quarter.

The firm’s picks are based on its preferred metric of cash flow return on investment (CFROI), a way to evaluate how much wealth a company is creating with its own spending — because the wealth it creates will dictate the performance of its stock over the long term.

Researchers John Talbott and Maxwell Bartucher say the group scores high on Credit Suisse’s HOLT methodology, and these stocks also have better-than-average price and momentum metrics compared to other stocks.

“The current portfolio of ideas, on the whole, exhibits higher quality characteristics compared to the broader market and it also offers a more appealing valuation profile,” they wrote.

The following 30 stocks are ranked from lowest to highest based on their cash flow return on investment over the last year. All but one, energy company EOG Resources, have a positive CFROI over those 12 months and almost all offered returns well into double digits.

The new additions since the second quarter were O’Reilly Automotive, Burlington Stores, Darden Restaurants, Levi Straus, Hershey, Baker Hughes, Intercontinental Exchange, Synchrony Financial, Merck, Anthem, Fortive, CDW, and Packaging Corp. of America.

Prominent names dropped from the list include

, UnitedHealth, and Booking Group.

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