u.s. equity strategy navigator
TRANSCRIPT
U.S. Equity Strategy Navigator April 2021
Strategy | Economics and Strategy
Recent Economic Data Reflects Stimulus and Reopening
The initial policy response to COVID resulted in the shortest recessionary decline
and largest bounce on record. 2021 GDP is forecasted to expand at the fastest
pace in nearly 4 decades and yields have jumped, the result of continued fiscal
actions ($900Bn and $1.9Tn). Government proposals indicate more to come.
Recent ISM readings hit a cycle high 64.7, 916k jobs were created last month
(660k estimate), and consumer confidence has rebounded.
2021 Earnings to Surge
Consensus forecasts are for 23% EPS growth in 2021. We expect a 30%
increase on stronger GDP growth and higher Financials profitability (rising rates,
falling delinquencies). Pricing power should be quite robust on strong demand and
higher commodity prices.
Small Caps and Value Dominated in 1Q
The S&P 500 returned 6.2% in 1Q21 vs. Small Caps at 12.7%. Value topped
Growth (11.3% vs. 0.9%). At the sector level, Financials and Cyclicals bested
Non-Cyclicals and TECH+ (16.0% and 11.3% vs. 3.2% and 2.3%).
10-Year Treasury Yields vs. ISM Manufacturing
Note: Latest ISM represents March reading
Source: Federal Reserve, ISM, Haver Analytics®, Credit Suisse
40
45
50
55
60
65
0.5
1.5
2.5
3.5
12 13 14 15 16 17 18 19 20 21
ISM (Mfg.) ut 10-Year Yield
%
ISM points to
rate upside
5 April 2021
Equity Research
Americas | United States
DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS,
LEGAL ENTITY DISCLOSURE AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could
affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.
Research Analysts
Jonathan Golub, CFA
212 325 6239
Patrick Palfrey
212 325 7970
Manish Bangard, CFA
212 325 6632 [email protected]
Chandni Chellappa
212 325 2759
Katherine Zhou
212 325 2722 [email protected]
5 April 2021
U.S. Equity Strategy Navigator 2
Inside this Navigator
Market Returns ........................................................................... 3-11
Reopening Recommendations .................................................... 12-15
Rates & Credit Spreads .............................................................. 16-19
Current Market Conditions ............................................................... 20
Market Composition ................................................................... 21-22
Economic Backdrop .................................................................. 23-34
Earnings ................................................................................... 35-46
Valuations ................................................................................ 47-52
The Long-Term Case for TECH+ ............................................... 53-54
Long-Term Trends .................................................................... 55-62
Sources & Uses of Cash ............................................................ 63-65
Leverage .................................................................................. 66-67
Market Returns ......................................................................... 68-70
Credit Suisse Targets & Recommendations ................................. 71-72
Throughout this report: Non-Cyclicals are Health Care, Staples, Utilities,
REITs, and Telecom. Cyclicals are Energy, Materials, Industrials, and Discretionary ex-Internet Retail. TECH+ is the Technology Sector; Internet
Retail within Discretionary; and Interactive Media & Services, Interactive
Home Entertainment, and NFLX from Movies & Entertainment within
Communication Services.
All data and prices as of March 31, 2021 unless otherwise noted.
5 April 2021
U.S. Equity Strategy Navigator 3
Market Returns
Total Return – 1Q21
Source: Standard and Poor’s, Russell, MSCI, FactSet, Credit Suisse
Total Return – 1 Year
Source: Standard and Poor’s, Russell, MSCI, FactSet, Credit Suisse
12.7
11.3
6.2
3.6
2.3
0.9
Russell
2000
Russell
1000
Value
S&P
500
EAFE
(USD)
EM
(USD)
Russell
1000
Growth
%
94.8
62.758.9
56.4 56.1
45.2
Russell
2000
Russell
1000
Growth
EM
(USD)
S&P
500
Russell
1000
Value
EAFE
(USD)
%
Market leadership has been
pro-cyclical in 1Q21, with Small
Caps and Value leading
The gap between Growth and
Value performance has narrowed
substantially
5 April 2021
U.S. Equity Strategy Navigator 4
Market Returns
Total Return – 1Q21
Source: Standard and Poor’s, FactSet, Credit Suisse
Total Return – 1 Year
Source: Standard and Poor’s, FactSet, Credit Suisse
16.0
11.3
3.22.3
Financials Cyclicals Non-Cyclicals TECH+
%
69.3 67.563.3
30.9
Cyclicals Financials TECH+ Non-Cyclicals
%
Market leadership has been
pro-cyclical in 1Q21, with
Financials and Cyclicals leading
Performance for Cyclicals and
Financials is now leading TECH+
on a 12-month basis
5 April 2021
U.S. Equity Strategy Navigator 5
Market Returns
Factor Returns – 1Q21
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
Factor Returns – 1 Year
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
11.5
6.3
4.3
1.0
-2.2-3.4 -3.8
-5.4
Low
P/E
52 Wk
Drawdown
Div
Yield
EPS
Growth
Low
Vol
Sales
Growth
High
ROA
Low
Leverage
%
11.3
4.9 4.23.0
1.5
-1.3
-3.6
-12.7
52 Wk
Drawdown
EPS
Growth
Div
Yield
Sales
Growth
Low
P/E
High
ROA
Low
Leverage
Low
Vol
%
Value and low quality led in 1Q,
while Growth and stability lagged
Over the past year, Growth and
cheapness have outperformed
modestly while stability has
underperformed
5 April 2021
U.S. Equity Strategy Navigator 6
Market Returns
Return Decomposition: Top 5 Stocks vs. Remaining 495 – 1Q21
Note: Largest 5 stocks: AAPL, AMZN, MSFT, GOOGL, FB
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
Return Decomposition: Top 5 Stocks vs. Remaining 495 Stocks – 1-Year
Note: Largest 5 stocks: AAPL, AMZN, MSFT, GOOGL, FB
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
13.2
9.4
-11.6
-1.9
0.1
7.3
Top 5 S&P 500
ex-Top 5
Top 5 S&P 500
ex-Top 5
Top 5 S&P 500
ex-Top 5
% EPS P/E Price Return
31.6
3.8
28.2
44.9
68.7
50.3
Top 5 S&P 500
ex-Top 5
Top 5 S&P 500
ex-Top 5
Top 5 S&P 500
ex-Top 5
% EPS P/E Price Return
The top-5 stocks underperformed
the rest of the market during 1Q,
on a decline in multiples
Over the past year, the top-5
stocks outperformed on stronger
EPS
5 April 2021
U.S. Equity Strategy Navigator 7
Market Returns
Peak to Trough Market Declines around Recessions
Note: Price return
Source: Standard & Poor’s, Haver Analytics®, Credit Suisse
Market Rebound 373 Days post Recessionary Trough
Note: Price return
Source: Standard & Poor’s, Haver Analytics®, Credit Suisse
'66
'68-70
'73-74
'80-82
'90
'00-02
'07-09
'20
-60
-50
-40
-30
-20
-10
0
0 200 400 600 800 1,000
% F
all
# of Days
'20: 78%
'09: 72%
'74: 46%
'70: 42%'90: 34%'02: 33%
'66: 30%
'82: 60%
Rebound %
# of Days0 373
%
The market’s -34% decline from
peak to trough was both
short-lived and modest relative to
other downturns
The market’s post-trough rebound
outpaced all similar recovery
periods since the 1960s
5 April 2021
U.S. Equity Strategy Navigator 8
Market Returns
Daily Market Moves
Source: Standard & Poor’s, Haver Analytics®, Credit Suisse
# of Trading Days
Year >1% >2% All-Time Highs
2007 65 17 9
2008 134 72 0
2009 117 55 0
2010 76 22 0
2011 96 35 0
2012 50 6 0
2013 38 4 45
2014 38 6 53
2015 72 10 10
2016 48 9 18
2017 8 0 62
2018 64 20 19
2019 37 7 35
2020 109 44 33
2021 18 3 15
Avg: 2007 - 2020 68 22 20
The S&P 500 continues to hit new
highs
5 April 2021
U.S. Equity Strategy Navigator 9
Market Returns
S&P 500 vs. High Yield Spreads
Source: Standard & Poor’s, the BLOOMBERG PROFESSIONAL™ service , Credit Suisse
S&P 500 vs. Inflation Expectations (10-Year Breakeven)
Source: Federal Reserve, Standard & Poor’s, Haver Analytics®, Credit Suisse
2.0
4.0
6.0
8.0
10.0
12.0
2,200
2,600
3,000
3,400
3,800
4,200
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
t S&P 500
CS HY Spread (Inverted) u
0.5
1.0
1.5
2.0
2.5
2,200
2,700
3,200
3,700
4,200
Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21
t 10-Yr Breakeven
S&P 500 u
Stocks tend to move inversely
with credit spreads.
The relationship between stock
prices and credit is much tighter
than with the general level of
interest rates
There is a very strong relationship
between inflation expectations
and stock prices
5 April 2021
U.S. Equity Strategy Navigator 10
Market Returns
S&P 500 vs. Oil
Source: Standard & Poor’s, the BLOOMBERG PROFESSIONAL™ service , Credit Suisse
S&P 500 vs. Copper
Source: Federal Reserve, Standard & Poor’s, Haver Analytics®, Credit Suisse
0
15
30
45
60
75
2,200
2,600
3,000
3,400
3,800
4,200
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
t S&P 500WTI u
$/Barrel
2.0
2.4
2.8
3.2
3.6
4.0
2,200
2,600
3,000
3,400
3,800
4,200
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20
t S&P 500
Copper u
$/Lb
Stocks respond positively to
higher commodity prices
5 April 2021
U.S. Equity Strategy Navigator 11
Market Returns
Average Daily S&P 500 Return on Up/Down Rate Days – Past Year
Source: Standard and Poor’s, Federal Reserve, Haver Analytics®, FactSet, Credit Suisse
Cyclical Sectors and CAI Index – 3 Month Rolling Returns
Source: Standard and Poor’s, Russell, Federal Reserve, Haver Analytics®, FactSet, Credit Suisse
0.45
-0.27
0.49
-0.35
0.39
-0.12
-0.35
0.53 0.54
-0.42
Up Down Up Down Up Down Up Down Up Down
10-Year Copper Oil HY Spread Cyclical
Acceleration Index
-60
-30
0
30
60
-36
-24
-12
0
12
24
05 10 15 20
Cyclical Sectorsu
t CAI Index
%60
-60
Stocks move in the same
direction as rates and
commodities, and the opposite
direction of spreads
The Cyclical Acceleration Index
(CAI) provides a real time
indication of economic
expectations and is based on
rising Treasury yields and
commodity prices (copper and oil),
and falling credit spreads
5 April 2021
U.S. Equity Strategy Navigator 12
Reopening Recommendations
Stocks by Exposure to Cyclical Acceleration Index (CAI) – ENERGY Sector
Source: Standard and Poor’s, Russell, Federal Reserve, EIA, CME, WSJ, Haver Analytics®, Credit Suisse
Stocks by Exposure to Cyclical Acceleration Index (CAI) - MATERIALS Sector
Source: Standard and Poor’s, Russell, Federal Reserve, EIA, CME, WSJ, Haver Analytics®, Credit Suisse
Ticker Company Name Ticker Company Name Ticker Company Name
CLR Continental Resources BKR Baker Hughes AM Antero Midstream
DVN Devon Energy COP ConocoPhillips COG Cabot Oil & Gas
FANG Diamondback Energy EOG EOG Resources CVX Chevron
HAL Halliburton HFC HollyFrontier EQT EQT (US)
HES Hess OKE ONEOK ETRN Equitrans Midstream
HP Helmerich & Payne PXD Pioneer Natural Resources KMI Kinder Morgan
MRO Marathon Oil SLB Schlumberger LNG Cheniere Energy
MUR Murphy Oil TRGP Targa Resources PSX Phillips 66
OXY Occidental Petroleum VLO Valero Energy WMB Williams Cos
XEC Cimarex Energy XOM Exxon Mobil
Super-Cyclical Cyclical Less-Cyclical
Ticker Company Name Ticker Company Name Ticker Company Name
ALB Albemarle AMCR Amcor ARD Ardagh Group
CBT Cabot APD Air Products & Chemicals ATR AptarGroup
CC Chemours ASH Ashland Global Holdings BLL Ball Corp
CE Celanese AVY Avery Dennison ECL Ecolab
CF CF Industries AXTA Axalta Coating Systems GPK Graphic Packaging Holding
DOW Dow BERY Berry Global Group GRA W R Grace
EMN Eastman Chemical CCK Crown MLM Martin Marietta Materials
ESI Element Solutions CTVA Corteva NEM Newmont Corp
FCX Freeport-McMoRan DD DuPont de Nemours NEU NewMarket
HUN Huntsman EXP Eagle Materials RGLD Royal Gold
LYB LyondellBasell Inds NV FMC FMC RPM RPM
MOS Mosaic IP Intl Paper SEE Sealed Air
NUE Nucor LIN Linde SHW Sherwin-Williams
OLN Olin PKG Packaging of America SLGN Silgan
SCCO Southern Copper PPG PPG Industries SMG Scotts Miracle-Gro
STLD Steel Dynamics RS Reliance Steel & Aluminum SON Sonoco Products
WLK Westlake Chemical VVV Valvoline VMC Vulcan Materials
WRK WestRock
Super-Cyclical Cyclical Less-Cyclical
5 April 2021
U.S. Equity Strategy Navigator 13
Reopening Recommendations
Stocks by Exposure to Cyclical Acceleration Index (CAI) - INDUSTRIALS Sector
Source: Standard and Poor’s, Russell, Federal Reserve, EIA, CME, WSJ, Haver Analytics®, Credit Suisse
Ticker Company Name Ticker Company Name Ticker Company Name
AAL American Airlines Group ACM AECOM ALLE Allegion
ADT ADT ALSN Allison Transmiss Hldgs AWI Armstrong World Inds
AGCO AGCO AME AMETEK BAH Booz Allen Hamilton Hldg
AL Air Lease AOS A. O. Smith BWXT BWX Technologies
ALK Alaska Air Group AXON Axon Enterprise CACI CACI
AYI Acuity Brands CLH Clean Harbors CHRW C.H. Robinson Worldwide
BA Boeing CMI Cummins CLGX CoreLogic
CAT Caterpillar CSX CSX CPRT Copart
CFX Colfax CTAS Cintas CSGP CoStar Group
CPA Copa DCI Donaldson CSL Carlisle Cos
CR Crane DE Deere & Co EFX Equifax
CW Curtiss-Wright DOV Dover Corp /IL EXPD Expeditors
DAL Delta Air Lines FBHS Fortune Brands Home & Sec FAST Fastenal
EAF GrafTech Intl FDX FedEx FCN FTI Consulting
EMR Emerson Electric FTV Fortive GD General Dynamics
ETN Eaton GNRC Generac GGG Graco
FLS Flowserve HON Honeywell International GWW WW Grainger
GE General Electric HUBB Hubbell HEI HEICO
GTES Gates Industrial HXL Hexcel HII Huntington Ingalls
HWM Howmet Aerospace IAA IAA IEX IDEX
IR Ingersoll Rand ITW Illinois Tool Works JBHT JB Hunt Transport Svcs
ITT ITT J Jacobs Engineering JCI Johnson Ctr Int
KEX Kirby JBLU JetBlue KNX Knight-Swift Transportation Holdings
LYFT Lyft KSU Kansas City Southern /US LDOS Leidos
MAN ManpowerGroup LECO Lincoln Electric LHX L3Harris Technologies
NVT nVent Electric LUV Southwest Airlines LII Lennox
OSK Oshkosh MIC Macquarie Infrastructure LMT Lockheed Martin
PH Parker-Hannifin MIDD Middleby LSTR Landstar System
R Ryder System MMM 3M MAS Masco
RHI Robert Half MSA MSA Safety MRCY Mercury Systems
ROK Rockwell Automation NDSN Nordson MSM MSC Industrial Direct
RTX Raytheon Technologies NSC Norfolk Southern NLSN Nielsen Hld
SPR Spirit AeroSystems Hldgs OC Owens Corning NOC Northrop Grumman
ST Sensata Technologies Hldg ODFL Old Dominion Freight Line ROL Rollins
SWK Stanley Black & Decker PCAR PACCAR ROP Roper Technologies
TDG TransDigm Group PNR Pentair RSG Republic Services
TKR Timken Co PWR Quanta Services SAIC Science Applications Intl
TRN Trinity Industries SNA Snap-On SNDR Schneider National
TXT Textron SRCL Stericycle TT Trane Technologies
UAL United Airlines Holdings TDY Teledyne Technologies TTC Toro Co
UNVR Univar Solutions TREX Trex UHAL AMERCO
URI United Rentals TRU TransUnion UPS United Parcel Service
VMI Valmont Industries UBER Uber Tech VRSK Verisk Analytics
WWD Woodward UNP Union Pacific WM Waste Management
XPO XPO Logistics WAB Wabtec WSO Watsco
XYL Xylem
Super-Cyclical Cyclical Less-Cyclical
5 April 2021
U.S. Equity Strategy Navigator 14
Reopening Recommendations
Stocks by Exposure to Cyclical Acceleration Index (CAI) – TECH+ Sector (1 of 2)
Source: Standard and Poor’s, Russell, Federal Reserve, EIA, CME, WSJ, Haver Analytics®, Credit Suisse
Ticker Company Name Ticker Company Name Ticker Company Name
ADS Alliance Data Systems AAPL Apple ACN Accenture
ADSK Autodesk ADBE Adobe ADP ADP
AMAT Applied Materials ADI Analog Devices AKAM Akamai Technologies
ARW Arrow Electronics ANET Arista Networks AMZN Amazon com
CDAY Ceridian ANSS ANSYS ATVI Activision Blizzard
CGNX Cognex APH Amphenol AZPN Aspen Technology
COHR Coherent AVGO Broadcom BKI Black Knight
COMM CommScope Holding AVLR Avalara BR Broadridge Financial Sol
DXC DXC Technology AVT Avnet CDK CDK Global
EEFT Euronet Worldwide AYX Alteryx CIEN Ciena
ENPH Enphase Energy CDNS Cadence Design Systems CTSH Cognizant Tech
ENTG Entegris CDW CDW CTXS Citrix Systems
FLT FLEETCOR Technologies COUP Coupa Software DBX Dropbox
GLW Corning CRM salesforce com DOX Amdocs Ltd
GRUB GrubHub CRUS Cirrus Logic EA Electronic Arts
HPE Hewlett Packard Enterp CSCO Cisco Systems EBAY eBay
HUBS HubSpot DELL Dell Technolges EVBG Everbridge
IPGP IPG Photonics DLB Dolby Laboratories FB Facebook
KLAC KLA DOCU DocuSign FFIV F5 Networks
LFUS Littelfuse EPAM EPAM Systems FIS Fidelity Natl Info Svcs
LITE Lumentum Holdings ESTC Elastic FISV Fiserv
LRCX Lam Research ETSY Etsy FIVN Five9
MA Mastercard FEYE FireEye G Genpact
MCHP Microchip Technology FICO Fair Isaac GDDY GoDaddy
MKSI MKS Instruments FLIR FLIR Systems GWRE Guidewire Software
MPWR Monolithic Power Systems FSLR First Solar Inc IBM IBM
MRVL Marvell Tech Group FTNT Fortinet Inc IT Gartner
MU Micron Technology GOOGL Alphabet JKHY Jack Henry & Associates
NCR NCR GPN Global Payments JNPR Juniper Networks
NTAP NetApp HPQ HP MDB MongoDB
NTNX Nutanix INTC Intel MSI Motorola Soltn
NVDA NVIDIA INTU Intuit NFLX Netflix
OLED Universal Display IPHI Inphi NLOK NortonLifeLock
ON ON Semiconductor KEYS Keysight Tech NUAN Nuance Communications
PCTY Paylocity Holding MANH Manhattan Associates OKTA Okta
PS Pluralsight MSFT Microsoft ORCL Oracle
PSTG Pure Storage MXIM Maxim Integrated Products PANW Palo Alto Networks
PTC PTC NATI National Instruments PAYX Paychex
QRVO Qorvo NEWR New Relic PD PagerDuty
Super-Cyclical Cyclical Less-Cyclical
5 April 2021
U.S. Equity Strategy Navigator 15
Reopening Recommendations
Stocks by Exposure to Cyclical Acceleration Index (CAI) – TECH+ Sector (2 of 2)
Source: Standard and Poor’s, Russell, Federal Reserve, EIA, CME, WSJ, Haver Analytics®, Credit Suisse
Ticker Company Name Ticker Company Name Ticker Company Name
SABR Sabre NOW ServiceNow PFPT Proofpoint
SEDG SolarEdge Technologies PAYC Paycom Software RNG RingCentral
SNX SYNNEX PEGA Pegasystems RP RealPage
SQ Square PLAN Anaplan SMAR Smartsheet
SWKS Skyworks Solutions PYPL PayPal Hldgs SNPS Synopsys
TER Teradyne QRTEA Qurate Retail SWCH Switch Inc
TRIP TripAdvisor SATS EchoStar SWI SolarWinds
TTD Trade Desk SPLK Splunk TDC Teradata
TWOU 2U SSNC SS&C Technologies Holdings TEAM Atlassian
TWTR Twitter TRMB Trimble TTWO Take-Two Interactive
W Wayfair TWLO Twilio TYL Tyler Technologies
WDC Western Digital TXN Texas Instruments UI Ubiquiti
WEX WEX V Visa VRSN VeriSign
XRX Xerox Holdings VMW VMware WDAY Workday
VSAT ViaSat WU Western Union
ZEN Zendesk Z Zillow Group
ZNGA Zynga
ZS Zscaler
Super-Cyclical Cyclical Less-Cyclical
5 April 2021
U.S. Equity Strategy Navigator 16
Rates & Credit Spreads
Federal Funds Target Rate with Futures
Source: FRB, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
10-Year Treasury Yields with Futures
Source: FRB, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
0.00
0.50
1.00
1.50
2.00
2.50
15 16 17 18 19 20 21 22 23 24
%
0.50
1.00
1.50
2.00
2.50
3.00
15 16 17 18 19 20 21 22 23 24
%%
Fed funds are expected to remain
near zero until 2022
10-Year Treasury yields are
expected to hit 2.5% in 2024
5 April 2021
U.S. Equity Strategy Navigator 17
Rates & Credit Spreads
10-Year Treasury-Yield
Source: Federal Reserve, Haver Analytics®, Credit Suisse
10-Year Yields vs. High Yield Spreads
Source: CBOE, Federal Reserve, Bank of America Merrill Lynch, Haver Analytics®, Credit Suisse
0.5
0.8
1.1
1.4
1.7
2.0
Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
1.56% Tr Yld on 2/19/20 (pre-pandemic high)
%
Current: 1.74%
1.7
3.8
0.7
9.8
10-Year Yield% HY Spread
Mar-2021 Mar-2020 Mar-2021 Mar-2020
10-Year Treasury yields are now
above pre-pandemic levels
Rates have risen and spreads
have fallen sharply over the past
year, a favorable backdrop for risk
assets
5 April 2021
U.S. Equity Strategy Navigator 18
Rates & Credit Spreads
Real Yield for 10-Year Treasury
Note: 7-Day Moving Average. Most recent reading represents actual month-end value
Source: Federal Reserve, Haver Analytics®, Credit Suisse
10-Year Treasury/Sovereign Yields of Developed Economies
Note: Pfizer announcement was on 11/06/20
Source: Federal Reserve, Cabinet Office of Japan, HM Treasury, Deutsche Finanzagentur, Haver Analytics®,
Credit Suisse
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
-2.0
-1.0
0.0
1.0
2.0
15 16 17 18 19 20 21
t Real Yield
10-Y Treasury u
1.74
0.84
-0.29
0.09
US UK Germ. Jpn.
% Treasury/Sovereign
Yields
92
57
33
7
US UK Germ. Jpn.
BpsChange since
Pfizer Ann.
Real yields are likely to remain
under pressure as inflation rises
Yield spreads between US and
ROW have widened substantially
5 April 2021
U.S. Equity Strategy Navigator 19
Rates & Credit Spreads
VIX vs. High Yield Spread
Source: CBOE, Federal Reserve, Bank of America Merrill Lynch, Haver Analytics®, Credit Suisse
High Yield Spread vs. Bankruptcies (3 Months Lagged)
Note: Bankruptcies are 3-months lagged
Source: Barclays, The BLOOMBERG PROFESSIONAL™ service, Credit Suisse
0
5
10
15
20
0
15
30
45
60
75
03 06 09 12 15 18 21
t HY Spread
t VIX
%
Bear
Stearns
Financial Crisis
EuropeanDebt
Crisis
U.S. Debt Downgrade
Spanish/Italian
Debt Concerns
Greek Debt Concerns
Inflation & Trade
Concerns
COVID-19
0
150
300
450
600
750
900
4
8
12
16
20
24
03 06 09 12 15 18 21
Bankruptcies u
t High Yield
%
Volatility and spreads tend to
move together
High yields spreads tend to lead
bankruptcies and loan defaults
5 April 2021
U.S. Equity Strategy Navigator 20
Current Market Conditions
Market Backdrop — Today vs. Prior Periods
Source: Standard & Poor’s, FactSet, The BLOOMBERG PROFESSIONAL™ service, Haver Analytics®, ISM,
Federal Reserve, BLS, CBOE, Credit Suisse
Mar 31, 2021 Dec 31, 2020 Dec 31, 2019
S&P 500 Level 3,973 3,756 3,231
Consensus EPS ($)
Next 12 Mos. (NTM) EPS 181.95 167.24 177.26
P/E (x)
NTM P/E 21.8 22.5 18.2
EPS Growth (%)
NTM EPS Growth 27.1 27.6 6.9
Yields (%)
10-Year Treasury 1.7 0.9 1.9
CS Inv Grade Bond Yield 2.7 1.9 2.9
(Investment Grade Spread) 1.0 1.0 1.0
CS High Yield Bond Yield 5.6 5.1 5.9
(High Yield Spread) 3.8 4.1 4.0
Economics
VIX Level 19.4 22.8 13.8
ISM Level 64.7 60.5 47.7
Unemployment Rate 6.0 6.7 3.6
While stock prices are above year-
end 2020 levels, valuations have
actually declined
5 April 2021
U.S. Equity Strategy Navigator 21
Market Composition
Market Weight (% of S&P 500)
Source: Standard & Poor’s, FactSet, Credit Suisse
NTM P/E
Source: Standard & Poor’s, FactSet, Refinitiv, Credit Suisse
Mar-92 Mar-02 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-20 Mar-21
Cyclicals
42.8
Non-
Cyclicals
35.4
Non-
Cyclicals
39.6
Cyclicals
34.5
Non-
Cyclicals
35.7
Non-
Cyclicals
36.1
Non-
Cyclicals
35.0
Non-
Cyclicals
32.6
TECH+
36.1
TECH+
39.0
Non-
Cyclicals
42.0
Cyclicals
29.1
Cyclicals
32.0
Non-
Cyclicals
32.4
Cyclicals
31.4
Cyclicals
29.3
Cyclicals
26.0
TECH+
30.6
Non-
Cyclicals
34.1
Non-
Cyclicals
28.1
Financials
9.6
Financials
18.3
TECH+
18.3
TECH+
19.0
TECH+
19.1
TECH+
21.0
TECH+
24.7
Cyclicals
24.0
Cyclicals
18.9
Cyclicals
21.6
TECH+
5.7
TECH+
17.4
Financials
10.0
Financials
14.2
Financials
13.8
Financials
13.6
Financials
14.4
Financials
12.7
Financials
10.9
Financials
11.2
Mar-92 Mar-02 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-20 Mar-21
Cyclicals
15.0
TECH+
36.3
TECH+
14.9
TECH+
13.7
Non-
Cyclicals
15.7
Non-
Cyclicals
17.7
TECH+
19.5
TECH+
20.8
TECH+
20.2
TECH+
28.4
Non-
Cyclicals
14.7
Cyclicals
21.5
Non-
Cyclicals
10.8
Non-
Cyclicals
13.3
TECH+
13.3
Cyclicals
17.5
Non-
Cyclicals
17.1
Non-
Cyclicals
16.1
Non-
Cyclicals
14.4
Cyclicals
24.6
TECH+
13.0
Non-
Cyclicals
19.4
Financials
10.5
Financials
10.9
Financials
11.1
TECH+
16.5
Financials
13.8
Cyclicals
16.0
Cyclicals
13.6
Non-
Cyclicals
17.4
Financials
10.5
Financials
14.5
Cyclicals
5.2
Cyclicals
6.0
Cyclicals
9.3
Financials
12.4
Cyclicals
13.1
Financials
11.2
Financials
9.1
Financials
13.2
5 April 2021
U.S. Equity Strategy Navigator 22
Market Composition
Revenues (% of S&P 500)
Source: Standard & Poor’s, FactSet, Credit Suisse
Earnings (% of S&P 500)
Source: Standard & Poor’s, FactSet, Credit Suisse
Mar-92 Mar-02 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-20 Mar-21
Cyclicals
56.0
Cyclicals
44.7
Cyclicals
43.8
Non-
Cyclicals
38.0
Cyclicals
38.8
Cyclicals
38.8
Non-
Cyclicals
41.0
Non-
Cyclicals
37.8
Non-
Cyclicals
38.6
Non-
Cyclicals
41.1
Non-
Cyclicals
26.5
Non-
Cyclicals
29.8
Non-
Cyclicals
35.8
Cyclicals
37.0
Non-
Cyclicals
36.2
Non-
Cyclicals
37.1
Cyclicals
33.2
Cyclicals
34.1
Cyclicals
33.0
Cyclicals
28.6
Financials
12.5
Financials
15.9
Financials
11.1
Financials
14.5
Financials
13.4
Financials
12.8
Financials
13.5
TECH+
14.4
TECH+
14.8
TECH+
16.6
TECH+
5.1
TECH+
9.6
TECH+
9.3
TECH+
10.6
TECH+
11.6
TECH+
11.3
TECH+
12.4
Financials
13.6
Financials
13.7
Financials
13.7
Mar-92 Mar-02 Mar-09 Mar-11 Mar-13 Mar-15 Mar-17 Mar-19 Mar-20 Mar-21
Non-
Cyclicals
42.9
Non-
Cyclicals
35.6
Cyclicals
41.1
Non-
Cyclicals
37.4
Non-
Cyclicals
32.0
Non-
Cyclicals
32.5
Non-
Cyclicals
38.2
Non-
Cyclicals
32.9
Non-
Cyclicals
34.5
Non-
Cyclicals
43.1
Cyclicals
38.0
Cyclicals
31.5
Non-
Cyclicals
37.9
Cyclicals
31.7
Cyclicals
31.7
Cyclicals
30.5
TECH+
21.9
TECH+
24.7
TECH+
23.8
TECH+
25.6
Financials
13.4
Financials
24.0
TECH+
15.6
TECH+
21.0
TECH+
20.6
TECH+
19.9
Cyclicals
21.8
Cyclicals
23.9
Cyclicals
22.8
Financials
18.0
TECH+
5.7
TECH+
8.9
Financials
5.4
Financials
9.8
Financials
15.6
Financials
17.1
Financials
18.1
Financials
18.4
Financials
18.8
Cyclicals
13.3
5 April 2021
U.S. Equity Strategy Navigator 23
Economic Backdrop
Daily COVID-19 Cases
Note: 7-day moving average, last data point actual
Source: Johns Hopkins University, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
Total COVID-19 Deaths
Note: 7-day moving average, last data point actual
Source: Johns Hopkins University, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
0
50
100
150
200
250
300
Feb-20 Apr-20 Jun-20 Aug-20 Oct-20 Dec-20 Feb-21
'000s
0
100
200
300
400
500
600
Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
'000s
Covid cases and hospitalizations
have been declining
5 April 2021
U.S. Equity Strategy Navigator 24
Economic Backdrop
COVID-19 Hospitalizations
Note: 7-day moving average, last data point actual
Source: Johns Hopkins University, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
% of Population Fully Vaccinated
Source: Johns Hopkins University, Centers for Civic Impact, CDC, Our World in Data, Credit Suisse
0
45
90
135
Feb-20 May-20 Aug-20 Nov-20 Feb-21
'000s
16.6
7.4
5.04.4
1.9
US UK Germany France Canada
%
5 April 2021
U.S. Equity Strategy Navigator 25
Economic Backdrop
GDP Consensus Expectations - 2021
Source: BEA, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
GDP Consensus Expectations - 2021
Note: 5-day moving average, last data point actual
Source: BEA, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
Real GDP
5.7%
Real GDP
6.6%
CPI
2.4%
CPI
2.7%
Nominal GDP
8.2%
Nominal GDP
9.4%
Overall Consensus Large Banks
1
2
3
4
5
6
7
8
9
Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
%
5.7
8.2
Nominal GDP u
t Real GDP
Consensuses expectations point
to a substantial pickup in GDP,
with large banks indicating an
even greater gain
5 April 2021
U.S. Equity Strategy Navigator 26
Economic Backdrop
Revenues vs. Nominal U.S. GDP
Source: Standard & Poor’s, BEA, FactSet, Haver Analytics®, Credit Suisse
2021 Revenue Growth – Consensus vs. Implied from GDP Estimates
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
-24
-12
0
12
24
-12
-6
0
6
12
00 05 10 15 20
S&P 500 Revenues u
t GDP
S&P 500 Revenues = 2.7 * Nominal GDP - 7.2%% %
2021 Revenue Est u
Based on 8.2% GDP
9.6
18.4
Bottom-up Consensus Implied from Large Bank
GDP estimates
%
2.7 * Nominal
GDP ( 9.4%)
– 7.2% = 18.4%
GDP forecasts imply much higher
revenue growth than analyst
forecasts
5 April 2021
U.S. Equity Strategy Navigator 27
Economic Backdrop
Relationship Between GDP and S&P 500 EPS
Source: BEA, Standard & Poor’s, the BLOOMBERG PROFESSIONAL™ service, Haver Analytics®, Credit
Suisse
Investments
Imports
Exports
Consumer
Government
GDP
0
2
4
6
8
10
12
14
-50 -25 0 25 50 75
2021 C
onsensu
s G
DP
Ests
.
Correlation with S&P 500 EPS Growth
%Imports and Investments have the
highest correlation to S&P 500
profits of any GDP components
Strength of Imports and
Investments will make economic
growth feel substantially stronger
than GDP forecasts imply
5 April 2021
U.S. Equity Strategy Navigator 28
Economic Backdrop
Real GDP YoY with Consensus Estimates
Source: BEA, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
Unemployment Rate with Consensus Estimates
Note: Data as of 4/2/21
Source: BLS, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
2.3
0.3
-9.0
-2.8 -2.5
-0.1
11.7
5.7 6.0 5.54.6
4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
%
3.5 3.8
13.0
8.8
6.8
6.0 5.95.4
5.0 4.8 4.5
4Q19 1Q20 2Q20 3Q20 4Q20 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22
%
Unemployment is expected to hit
5% by 4Q21
5 April 2021
U.S. Equity Strategy Navigator 29
Economic Backdrop
U.S. ISM New Orders – Manufacturing vs. Services
Note: 3-month moving average
Source: Institute for Supply Management, Haver Analytics®, Credit Suisse
U.S. PCE – Goods vs. Services
Note: Indexed at 100 on December 2018.
Source: BEA, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
30
35
40
45
50
55
60
65
70
Dec-18 Jun-19 Dec-19 Jun-20 Dec-20
t ISM -Svcs
t ISM - Mfg
80
90
100
110
120
130
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21
From Feb '20 Level:
-7.0%
From Feb '20 Level:
9.3%
PCE - Goods u
PCE - Services u
Marginal consumer spending has
favored goods over services
We expect this trend to reverse
5 April 2021
U.S. Equity Strategy Navigator 30
Economic Backdrop
Federal Reserve Balance Sheet at a % of GDP
Note: 3 month moving average with most recent data point being actual value. CS Economics team estimates
Source: Federal Reserve, BEA, The BLOOMBERG PROFESSIONAL™ service, Credit Suisse
US Federal Debt Held by the Public as a % of GDP
Note: 2020 and 2021 are consensus estimates
Source: OMB, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
0
5
10
15
20
25
30
35
40
90 94 98 02 06 10 14 18
%
CS Estimates u
20
30
40
50
60
70
80
90
100
110
40 50 60 70 80 90 00 10 20
%
Consensus Estimates u
While deficit spending and Fed
purchases might be helpful near
term, they represent a future
burden
5 April 2021
U.S. Equity Strategy Navigator 31
Economic Backdrop
Federal Reserve Balance Sheet vs. Deficit as a % of GDP
Note: 12 month moving average
Source: Federal Reserve, The BLOOMBERG PROFESSIONAL™ service, Credit Suisse
-20
-10
0
10
20
30
40
00 05 10 15 20
%
Federal Balance Sheet as
a Percentage of GDP u
Federal Deficit as a
Percentage of GDP u
It appears that the Federal
Reserve is monetizing budget
deficits
5 April 2021
U.S. Equity Strategy Navigator 32
Economic Backdrop
Debt to GDP
Note: Debt to GDP held by the public for the U.S.
Source: Federal Reserve, Office for National Statistics, Banque de France, Deutsche Bundesbank, Istituto
Nazionale di Statistica, Bank of Japan, Ministerio de Economía y Producción, Haver Analytics®, Credit Suisse
Global Negative Yielding Debt
Note: 3-Month Rolling Average with last data point actual
Source: Barclays, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
68.9
99.2 100.7112.7
151.2
220.0
256.3
Germany U.K. U.S. France Italy Japan Greece
%
5
10
15
20
16 17 18 19 20
$ Tn.
5 April 2021
U.S. Equity Strategy Navigator 33
Economic Backdrop
M2 Growth
Note: 3 month moving average with most recent data point being actual value
Source: Federal Reserve, the BLOOMBERG PROFESSIONAL™ service, and Credit Suisse
Money Velocity
Note: GDP divided by M2 Money Supply; Indexed to 100 in 2000
Source: Federal Reserve, BEA, Cabinet Office of Japan, Statistical Office of the European Communities, ECB,
Haver Analytics®, Credit Suisse
0
5
10
15
20
25
30
90 94 98 02 06 10 14 18
%
40
50
60
70
80
90
100
00 05 10 15 20
Europe u
t U.S.
Japan u
An increase in money supply is
only helpful to the extent that the
velocity of money is stable
In recent years, the velocity of
money has fallen in response to
uber-easy monetary policy
5 April 2021
U.S. Equity Strategy Navigator 34
Economic Backdrop
Savings Rate vs. 10-Year Yield
Note: 1975 to Present
Source: Federal Reserve, BEA, Haver Analytics®, Credit Suisse
0
4
8
12
16
20
0 5 10 15
Pe
rso
nal S
avin
gs R
ate
10-Year Treasury Yield
%
%
Most recent
Extremely low interest rates
suppress spending, limiting their
potential benefits
Currently high savings rates are
the result of shelter-at-home
policies
5 April 2021
U.S. Equity Strategy Navigator 35
Earnings
S&P 500 Consensus EPS Growth: 2020
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
S&P 500 Consensus EPS Growth: 2021
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
-13.5-15.4
-32.3
-8.2
1.4
2020 1Q20 2Q20 3Q20 4Q20
%
23.3
20.2
50.1
17.9
13.1
2021 1Q21 2Q21 3Q21 4Q21
%
4Q EPS is above prior year levels
Earnings are expected to expand
in each quarter of 2021
5 April 2021
U.S. Equity Strategy Navigator 36
Earnings
2020 EPS Growth: Value vs. Growth
Source: Russell, Refinitiv, FactSet and Credit Suisse
2021 EPS Growth: Value vs. Growth
Source: Russell, Refinitiv, FactSet and Credit Suisse
13.4
6.7 7.8
15.7
21.0
-17.1 -17.0
-37.5
-11.9
-1.9
Gr Val Gr Val Gr Val Gr Val Gr Val
2020%
1Q20 2Q20 3Q20 4Q20
17.7
28.2
23.7
13.8
9.4
26.4
22.2
59.5
19.2
14.8
Gr Val Gr Val Gr Val Gr Val Gr Val
2021%
1Q21 2Q21 3Q21 4Q21
Growth delivered positive EPS in
each quarter of 2020
Value is expected to deliver
stronger EPS growth in 2021
5 April 2021
U.S. Equity Strategy Navigator 37
Earnings
Historical EPS Surprise
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
4Q20 EPS Surprises by Super Sector
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
6.0 6.27.4
5.2 5.6 5.54.5
3.0
7.5
4.1
6.6
3.6
6.45.2
4.6 4.3
2.9
23.2
19.4
15.5
11.6
1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21
%
24.3
19.518.4
15.5
5.7
Financials TECH+ Cyclicals S&P 500 Non-Cyclicals
%
Companies have been delivering
outsized surprises, a trend we
believe will persist in 2021
Analysts are likely to continue to
underestimate the path of
earnings, the result of ongoing
monetary and fiscal stimulus
5 April 2021
U.S. Equity Strategy Navigator 38
Earnings
Historical Revision to Annual S&P 500 EPS Estimates
Note: EPS indexed at 100 on 9/30 of prior year
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
S&P 500 2021 EPS Revision Trend
Note: Historical trend based on estimates from 2011-19. 2021 EPS Indexed at 100 on September 30, 2020
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
50
60
70
80
90
100
110
96 00 04 08 12 16 20
t 2004
1998 p
2001 u
2009 u
2008 u
t 2010
2012 u2015 u
t 2018
2020 u
2021 u
96
98
100
102
104
106
108
Sep Oct Nov Dec Jan Feb Mar
t Historical Trend
t 2021
Estimates tend to rise coming out
of an economic downturn
2018 was an exception due to tax
changes
2021 estimates have been
steadily rising
5 April 2021
U.S. Equity Strategy Navigator 39
Earnings
2021 Consensus EPS Growth
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
2022 Consensus EPS Growth
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
23.3
88.2
25.0
18.414.1
4.4
S&P
500
Cyclicals Financials TECH+ Health
Care
Non Cyclicals
ex-Health
Care
%
15.1
31.3
14.1
10.9
6.8 6.6
S&P
500
Cyclicals TECH+ Financials Health
Care
Non Cyclicals
ex-Health
Care
%
Cyclicals are expected to deliver
the strongest growth in 2021-22
5 April 2021
U.S. Equity Strategy Navigator 40
Earnings
U.S. 2021 Consensus Growth Dashboard
Note: Blend of actuals where available and estimates
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
Weighted Growth YoY (%)
Revenue Margins Earnings Buybacks EPS
S&P 500 9.6 13.0 22.7 0.6 23.2
Energy 28.6 782.7 811.3 29.5 840.7
Materials 12.8 27.8 40.5 1.1 41.6
Industrials 10.5 60.5 71.0 5.8 76.8
Capital Goods 8.9 21.7 30.6 0.7 31.3
Business Services 3.6 4.2 7.8 0.5 8.3
Transportation 16.8 253.4 270.2 -26.5 243.7
Discretionary 15.0 33.6 48.6 2.1 50.8
Automobiles & Components 23.5 28.7 52.2 -1.1 51.1
Durables & Apparel 13.4 21.6 34.9 -0.1 34.8
Consumer Services 28.4 128.3 156.6 -3.6 153.1
Hardline Retail 4.2 3.8 8.0 1.7 9.7
Internet Retail 22.7 -5.6 17.1 -1.9 15.3
Softline Retail 17.1 90.6 107.7 0.1 107.8
Technology 11.1 7.3 18.4 -0.3 18.1
Software & Services 9.7 4.2 13.9 0.8 14.7
Technology Hardware 11.4 14.5 25.9 -3.5 22.4
Semiconductors 13.3 3.8 17.1 1.6 18.8
Comm Svcs 11.3 0.6 11.9 0.8 12.7
Telecommunication Services 2.9 -3.3 -0.4 1.0 0.6
Internet Svcs & Home Ent 23.1 -3.8 19.3 0.8 20.1
Media & Entertainment 8.9 6.4 15.2 0.5 15.7
Financials 0.0 22.8 22.8 1.5 24.3
Investment Banks -1.7 22.2 20.5 1.5 21.9
Regional Banks -0.5 43.8 43.2 1.9 45.1
Diversified Financials 0.7 21.4 22.1 -1.0 21.1
Insurance 1.9 8.0 9.9 2.0 11.9
Staples 3.2 3.1 6.2 0.5 6.7
Food & Staples Retailing 2.2 -1.5 0.7 2.3 3.0
Food Beverage & Tobacco 4.2 3.3 7.4 -0.2 7.3
Household & Personal Products 5.8 2.3 8.1 0.3 8.4
Health Care 8.6 5.3 13.9 0.2 14.1
HC Equipment & Services 7.0 6.8 13.8 0.1 13.9
Pharma, Biotech, & Life Sci 14.5 -0.6 13.9 0.3 14.2
Utilities 6.2 0.1 6.4 -1.8 4.6
REITs 6.2 -1.2 5.0 -2.1 2.9
TECH+ 15.0 3.5 18.5 -0.2 18.3
S&P 500 ex-TECH+ 8.5 19.1 27.6 0.9 28.5
Cyclicals 14.6 68.3 82.9 4.1 86.9
S&P 500 ex-Cyclicals 7.4 8.1 15.5 0.2 15.7
Non-Cyclicals 6.3 3.2 9.4 0.0 9.4
EPS growth is expected to grow
23% in 2021 led by Cyclicals
5 April 2021
U.S. Equity Strategy Navigator 41
Earnings
U.S. 1Q21 Consensus Growth Dashboard
Note: Blend of actuals where available and estimates
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
Weighted Growth YoY (%)
Revenue Margins Earnings Buybacks EPS
S&P 500 8.3 14.7 23.0 0.5 23.5
Cyclicals
Energy -9.4 8.8 -0.7 -4.3 -5.0
Materials 9.6 36.5 46.1 -0.1 46.1
Industrials -3.2 -15.1 -18.3 -0.1 -18.4
Discretionary 14.6 67.7 82.3 17.9 100.2
Financials 24.7 45.1 69.9 1.1 71.0
Technology 15.7 5.7 21.5 2.9 24.3
Comm Svcs 9.2 1.0 10.2 -0.9 9.3
Non-Cyclicals
Staples 1.0 -1.4 -0.4 0.8 0.4
Health Care 9.4 10.1 19.5 -1.5 18.1
Utilities 5.1 -0.2 4.9 -2.1 2.7
REITs -0.3 -0.1 -0.4 -2.0 -2.4
FAANG 32.5 20.4 52.9 3.9 56.8
TECH+ 20.8 5.6 26.4 2.6 29.0
Cyclicals 0.2 10.7 10.8 1.3 12.1
S&P 500 ex-TECH+ 5.9 15.7 21.6 -0.2 21.5
S&P 500 ex-Cyclicals 12.6 13.0 25.7 0.4 26.0
Discretionary and Financials are
expected to deliver robust growth
in 1Q21
5 April 2021
U.S. Equity Strategy Navigator 42
Earnings
Historical Revenue Growth
Note: Estimates based on consensus estimates
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
Historical EPS Growth
Note: Estimates based on consensus estimates
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
-1.7
-0.3
2.5
4.7
7.3
5.2 5.5
8.1 8.1
9.68.6
4.8
2.5 2.4 2.0
3.9
0.9
-8.8
-1.9
1.9
8.3
1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21E
%
-5.1-1.7
4.79.0
15.4
9.6 7.9
12.7
26.125.428.2
17.1
2.8 3.8 1.1 2.9
-13.6
-30.7
-6.4
4.1
23.5
1Q16 3Q16 1Q17 3Q17 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21E
%
Revenue and EPS growth are
expected to rebound in 1Q21
5 April 2021
U.S. Equity Strategy Navigator 43
Earnings
ISM Manufacturing vs. % of Companies Beating Earnings
Note: ISM is 3-Month Moving Average with last data point actual. Latest ISM represents March reading
Source: Institute for Supply Management, Standard & Poor’s, Refinitiv, Haver Analytics®, FactSet, Credit Suisse
Price Response Spread: Double Beats Less Double Misses
Note: Double beats are companies surpassing both revenue and EPS estimates, double misses are companies
missing both revenue and EPS estimates.
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
30
35
40
45
50
55
60
65
45
50
55
60
65
70
75
80
85
98 01 04 07 10 13 16 19
ISM (Mfg.) u
t % of Companies Beating
%
0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20
%
Earnings surprises trend with the
ISM
Despite strong surprises, stocks
had little reaction in 3Q/4Q
5 April 2021
U.S. Equity Strategy Navigator 44
Earnings
Interest as a % of Sales
Note: S&P 500, trailing 4Q basis; 4Q moving average
Source: Standard & Poor’s, FactSet, Credit Suisse
Aggregate Tax Rate
Note: Blend of actuals where available and estimates;
Source: Standard & Poor’s, Refinitiv, FactSet, and Credit Suisse
1
2
3
4
5
6
7
91 96 01 06 11 16 21
Avg = 4.4%
Avg = 2.1%
%
30.6 30.430.9
31.5
30.2 30.3
31.7 31.7
29.629.3
27.627.1
26.3
20.1 20.2
18.5
20.020.3
05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
%
Lower interest and taxes have
contributed positively to earnings
growth
5 April 2021
U.S. Equity Strategy Navigator 45
Earnings
S&P 500 EBIT Margins vs. Industrial Commodity Prices
Note: S&P 500 ex-Financials & REITs; CRB Raw Industrials Index is lagged by 1 quarter
Source: Standard & Poor’s, Commodity Research Bureau, FactSet, Haver Analytics®, Credit Suisse
Oil
Note: 5-Day Moving Average with last data point actual; Pre-Pandemic denotes price as of 2/19/20
Source: EIA, Haver Analytics®, Credit Suisse
200
300
400
500
600
9.5
10.5
11.5
12.5
13.5
14.5
01 06 11 16 21
CRB Raw Industrials
(lagged by 1 qtr.) u
t EBIT Margins
%
0
20
40
60
80
18 19 20 21
$/Bbl
Current: $60.14
Pre-pandemic: $52.18
Pre-Pandemic $52.18
Current $60.14
Change 15.3%
Commodity prices tend to lead
margins by 1 quarter
5 April 2021
U.S. Equity Strategy Navigator 46
Earnings
Copper
Note: 5-Day Moving Average with last data point actual; Pre-Pandemic denotes price as of 2/19/20
Source: WSJ, Haver Analytics®, Credit Suisse
Lumber
Note: 5-Day Moving Average with last data point actual; Pre-Pandemic denotes price as of 2/19/20
Source: CME, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
2.0
2.5
3.0
3.5
4.0
4.5
18 19 20 21
$/Lb
Current: $4.02
Pre-pandemic: $2.61
Pre-Pandemic $2.61
Current $4.02
Change 54.0%
200
400
600
800
1,000
1,200
17 18 19 20
$/1000 Board Feet
Current: $1009.10
Pre-pandemic: $460.30
Pre-Pandemic $460.30
Current $1009.10
Change 119.2%
The pickup in oil, copper and
lumber prices should have a
significant positive impact on
2021 EPS
5 April 2021
U.S. Equity Strategy Navigator 47
Valuations
S&P 500 NTM P/E
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
S&P 500 P/FCF
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
5
10
15
20
25
65 75 85 95 05 15
Avg. P/E: 14.5
Current P/E:
21.8
-1 SD: 10.4
+1 SD: 18.6
x
0
10
20
30
40
50
60
70
80
84 89 94 99 04 09 14 19
x
+1 SD: 38.9
-1 SD: 12.7
Avg. P/FCF: 25.8
Current P/FCF: 30.1
Multiples appear quite elevated
5 April 2021
U.S. Equity Strategy Navigator 48
Valuations
S&P 500 P/ROC (Dividends + Buybacks)
Note: Russell 1000 prior to 1990, S&P 500 after 1990.
Source: Standard & Poor’s, Russell, Refinitiv, FactSet, Credit Suisse
10
20
30
40
50
60
70
80
84 89 94 99 04 09 14 19
x
-1 SD: 21.4
+1 SD: 51.0
Avg. P/ROC: 36.2
Current P/ROC: 39.9The price to return of capital has
recently jumped as buybacks
have fallen. This should quickly
reverse
5 April 2021
U.S. Equity Strategy Navigator 49
Valuations
Free Cash Flow as a % of Sales
Note: Russell 1000 prior to 1990, S&P 500 after 1990; Trailing 4Q basis; 4Q Moving Average
Source: Standard & Poor’s, Russell, FactSet, Credit Suisse
Free Cash Flow vs. Return of Capital
Note: Shaded areas denote recession; Russell 1000 prior to 1990, S&P 500 after 1990; Ex-Financials & REITs;
Trailing 4Q basis; 4Q Moving Average
Source: Standard & Poor’s, Russell, NBER, FactSet, Credit Suisse
0
2
4
6
8
10
12
85 90 95 00 05 10 15 20
Avg = 4.7%
Avg = 10.1%%
0
200
400
600
800
1,000
85 90 95 00 05 10 15 20
Free Cash Flow u
t Dividends +
Buybacks
$ Bn
Following recessions,
companies often
redirect capital
toward balance
sheet repair
Companies have been more cash
flow generative in recent years
Cash flows have been strong
while dividends and buybacks
have recently declined
5 April 2021
U.S. Equity Strategy Navigator 50
Valuations
Bond Yields vs. S&P 500 Multiples
Note: Implied P/E based on the inverse of the Baa yield
Source: Standard and Poor’s, Moody’s, FactSet, Refinitiv, Credit Suisse
3.8%
26.5x
21.8x
3.8%
26.4x
21.8x6.3%
15.8x14.1x
1.7%0.7%
3.8%
2.0%3.1%
2.5%
Baa
Yield
Implied
P/E
Actual
P/E
Baa
Yield
Implied
P/E
Actual
P/E
Baa
Yield
Implied
P/E
Actual
P/E
March 2020
Spread
10-Yr
March 2010Current
5 April 2021
U.S. Equity Strategy Navigator 51
Valuations
Sector P/Es
Note: Energy removed from analysis due to negative forward earnings
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
Relative Sector P/Es (vs. the S&P 500)
Note: Energy removed from analysis due to negative forward earnings
Source: Standard & Poor’s, Refinitiv, FactSet and Credit Suisse
5
10
15
20
25
30
35
40
S&P
500
Disc Tech Ind Comm Mat REITs Fin Stap Util H.C.
x Cur
Avg
10 Yr
Range
-10
-5
0
5
10
15
20
Disc Ind Tech Comm REITs Mat Fin Stap Util H.C.
x
Cur
Avg
10 Yr
Range
7 sectors trade at a larger discount to the
market than their 10-year average
All 11 sectors are trading above
their 10-year average
Discretionary, Industrials, and
Tech each trade at a premium to
their history
Financials, Staples, Utilities, and
Health Care appear the most
attractively priced
5 April 2021
U.S. Equity Strategy Navigator 52
Valuations
10 Year Annualized Stock Returns vs. Starting P/E Levels
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse
1 Year Annualized Stock Returns vs. Starting P/E Levels
Source: Standard & Poor’s, FactSet, Refinitiv, Credit Suisse
-10
-5
0
5
10
15
20
5 10 15 20 25
An
nu
alize
d 1
0-Y
ear
Re
turn
Starting Forward P/E
%
x
Current: 21.8
-60
-40
-20
0
20
40
60
80
5 10 15 20 25
1-Y
ear
Retu
rn
Starting Forward P/E
%
x
Current: 21.8
Historically, future returns have
been lower when multiples are
elevated
5 April 2021
U.S. Equity Strategy Navigator 53
The Long-Term Case for TECH+
Revenue Growth (Indexed to 100)
Note: 4-Quarter Moving Average;
Source: Standard & Poor’s, FactSet, Credit Suisse
EBIT Margins
Note: S&P 500 ex-Financials; Trailing 12-Month EBIT Margin; 4-Quarter Moving Average;
Source: Standard & Poor’s, FactSet, Credit Suisse
100
200
300
400
500
600
95 00 05 10 15 20
t S&P 500 ex-TECH+
TECH+ u
0
5
10
15
20
25
95 00 05 10 15 20
p S&P 500 ex-TECH+
TECH+ u
%
Since 2009, TECH+ revenue
growth has meaningfully
exceeded the broad market
While margins have been stable
for the broad market, they have
been rising for TECH+
5 April 2021
U.S. Equity Strategy Navigator 54
The Long-Term Case for TECH+
FCF as a % of Sales – TECH+ vs. S&P 500 ex-TECH+
Note: Trailing 12-months;
Source: Standard & Poor’s, FactSet, Credit Suisse
0
5
10
15
20
25
95 00 05 10 15 20
%
t S&P 500 ex-TECH+
t TECH+
TECH+ companies generate twice
as much FCF as other companies
5 April 2021
U.S. Equity Strategy Navigator 55
Long-Term Trends
Dow Jones Industrial Average Super Cycle
Source: Dow Jones, FactSet, Credit Suisse
10-Year Treasury Yield
Note: 12-Month Moving Average. Most recent reading represents actual month-end value
Source: Federal Reserve, Haver Analytics®, Credit Suisse
40
400
4,000
40,000
35 45 55 65 75 85 95 05 15
Log Scale
0
3
6
9
12
15
63 73 83 93 03 13
% Decade Average
'60s 4.8
'70s 7.5
'80s 10.6
'90s 6.7
'00s 4.5
'10s 2.4
'20s 0.9
Investor behavior tends to be
regime-specific, with returns,
rates and valuations moving in a
specific pattern for extremely long
(often multi-decade) periods
5 April 2021
U.S. Equity Strategy Navigator 56
Long-Term Trends
U.S. Historical GDP Growth
Note: Real GDP; 5-Year Moving Average
Source: BEA, Haver Analytics®, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
G7 ex-U.S. GDP Growth
Note: Real GDP; 5-Year Moving Average
Source: BEA, World Bank, Deutsche Bundesbank, Institut National de la Statistique/Economique, Haver
Analytics®, the BLOOMBERG PROFESSIONAL™ service, Credit Suisse
0
2
4
6
60 70 80 90 00 10 20
Avg = 3.4%
Avg = 1.4%
%
Perceived
Output Gap
-1
0
1
2
3
4
5
6
60 70 80 90 00 10 20
Avg = 2.6%
Avg = 0.9%
%
Perceived
Output
Gap
Avg = 5.6%
Data Unavailable Prior to
1965
The U.S. and global economies
have decelerated over the past
decade
5 April 2021
U.S. Equity Strategy Navigator 57
Long-Term Trends
U.S. Potential GDP Growth
Source: Congressional Budget Office, Credit Suisse
U.S. Productivity
Note: 3-Year Moving Average of YoY change in real GDP divided by aggregate hours; +/- 1 standard deviation
Source: BLS, BEA, Haver Analytics®, Credit Suisse
1.4
0.5
Real Potential GDP
%
t Labor Force Growth
t Productivity
1.9
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
75 85 95 05 15
%
According to the CBO, 1.4% of
potential GDP will come from
productivity, 0.5% from labor
force growth
Productivity has improved over
the past couple of years
5 April 2021
U.S. Equity Strategy Navigator 58
Long-Term Trends
U.S. Retirees as a Percent of Total Population
Source: United Nations, Haver Analytics®, Credit Suisse
Working Age Population per Retiree
Source: United Nations, Haver Analytics®, Credit Suisse
15
20
25
30
90 95 00 05 10 15 20 25 30 35 40
%
3.2
2.5
1.9
2.9
2.1
1.4
3.2
1.5
1.0
6.2
3.8
1.7
1990 20172040E 1990 20172040E 1990 20172040E 1990 20172040E
U.S. Europe Japan China
Aging population is a natural
headwind for economic growth
5 April 2021
U.S. Equity Strategy Navigator 59
Long-Term Trends
Population vs. Labor Force Growth
Note: Annualized growth rates
Source: BLS, Haver Analytics®, Credit Suisse
U.S. Labor Force Participation — Male vs. Female
Source: OECD, Haver Analytics®, Credit Suisse
1.0
0.7
1.7
0.3
1970-2008 2008-2020 1970-2008 2008-2020
% Population Growth Labor Force Growth
30
45
60
75
60 70 80 90 00 10 20
Femaleu
tMale
%
Labor force growth is substantially
lagging population growth, the
result of demographic forces
Male and female labor force
participation are both in decline
5 April 2021
U.S. Equity Strategy Navigator 60
Long-Term Trends
U.S. Labor Force Participation by Age Group
Source: BLS, Haver Analytics®, Credit Suisse
Fertility – U.S. vs. India
Source: United Nations, Haver Analytics®, Credit Suisse
55.9
82.9 83.2 81.4
65.3
20.2
16-24 25-34 35-44 45-54 55-64 65+
%
1.5
3.0
4.5
6.0
60 65 70 75 80 85 90 95 00 05 10 15 20
t India
U.S. u
Labor force participation fades as
the population ages
5 April 2021
U.S. Equity Strategy Navigator 61
Long-Term Trends
Fertility Rate
Source: United Nations, Haver Analytics®, Credit Suisse
Median Female Age
Source: United Nations, Haver Analytics®, Credit Suisse
1.9
1.8
1.61.5
1.4 1.3
2.2
1.81.7
1.7
Fra U.S. U.K. Ger Can Jap Ita Ind Rus Bra Chi
G7 Average: 1.6 BRIC Average: 1.9
1.8
50.049.1
47.5
43.4 42.941.7
43.2
39.4
34.1
29.5
39.8
Jap Ger Ita Fra Can U.K. U.S. Rus Chi Bra Ind
G7 Average: 44.9 BRIC Average: 36.6
40
5 April 2021
U.S. Equity Strategy Navigator 62
Long-Term Trends
U.S. Birth and Death Rates
Source: United Nations, Haver Analytics®, Credit Suisse
Births Minus Deaths by Country
Source: United Nations, Haver Analytics®, Credit Suisse
7
10
13
16
19
22
25
60 70 80 90 00 10 20
Per 1,000 People
Births u
Deaths q
2.7 2.2 2.0
-1.7
-2.8 -2.9
10.8
7.7
4.8
0.1
3.3
U.S. Can U.K. Fra Ger Ita Jap Ind Bra Chi Rus
G7 Average: 0.4 BRIC Average: 5.8
5 April 2021
U.S. Equity Strategy Navigator 63
Sources & Uses of Cash
Dividend Payout Ratio
Note: S&P 500 index excluding Financials & REITs; Shaded area denotes recession
Source: Standard & Poor’s, FactSet, Credit Suisse
Buyback Payout Ratio
Note: S&P 500 index excluding Financials & REITs; Shaded area denotes recession
Source: Standard & Poor’s, FactSet, Credit Suisse
20
30
40
50
60
90 95 00 05 10 15 20
%
-20
0
20
40
60
80
90 95 00 05 10 15 20
%
Dividend payout ratios tend to rise
during recessions, with dividends
holding steady and earnings
declining
Buyback payout ratios tend to fall
during recessions as companies
attempt to preserve capital
5 April 2021
U.S. Equity Strategy Navigator 64
Sources & Uses of Cash
S&P 500 Dividend Yield
Note: GICS sectors except Communications, which is split between Telecom and Media/Entertainment
Source: Standard & Poor’s, Federal Reserve, FactSet, Refinitiv, Credit Suisse
4.5
4.2
3.2
2.7 2.6
2.01.7 1.7
1.5 1.5 1.5
1.0
0.6
0.2
Ene Tele Util Stap REITs Fin 10Y
Yield
Mat H.C. Ind S&P
500
Tech Disc Media
& Ent
%The market dividend yield has
fallen below the 10-year treasury
yield
5 April 2021
U.S. Equity Strategy Navigator 65
Sources & Uses of Cash
IPO Listings – Annual
Note: Includes all listings priced on U.S. exchanges. Special Purpose Acquisitions are excluded.
Source: FactSet, Credit Suisse
M&A Activity – Annual
Note: Includes all transactions over US$1 billion in North America.
Source: MergerStat, FactSet, Credit Suisse
99 91 90
252
224229
276
40
71
188
162175
260
311
182
122
190
230
196
249
118
01 03 05 07 09 11 13 15 17 19 21YTD
194
216
114
70 70
126
160
218
249
90
71
140127
175
148
237230231231
270
230235
144
99 01 03 05 07 09 11 13 15 17 19 21
YTD
IPO and M&A activity typically
decline around recessions;
however, recent activity has been
surprisingly robust
5 April 2021
U.S. Equity Strategy Navigator 66
Leverage
Net Debt-to-Equity – Large Cap vs. Small Cap
Note: 4-Quarter Moving Average; Excludes Financials and REITs
Source: Standard & Poor’s, Russell, FactSet, Credit Suisse
Net Debt-to-EBITDA – Large Cap vs. Small Cap
Note: 4-Quarter Moving Average; Excludes Financials and REITs
Source: Standard & Poor’s, Russell, FactSet, Credit Suisse
30
40
50
60
70
80
90
100
110
96 01 06 11 16 21
%
Russell 2000 u
t S&P 500
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
91 96 01 06 11 16 21
x
Russell 2000 u
t S&P 500
During economic recoveries,
companies with greater financial
leverage tend to outperform
Smaller-caps have much greater
leverage than their larger peers
5 April 2021
U.S. Equity Strategy Navigator 67
Leverage
Interest Coverage – Large Cap vs. Small Cap
Note: 4-Quarter Moving Average; Excludes Financials and REITs
Source: Standard & Poor’s, FactSet, Credit Suisse
Short-Term Debt to Cash – Large Cap vs. Small Cap
Note: 4-Quarter Moving Average; Excludes Financials and REITs
Source: Standard & Poor’s, FactSet, Credit Suisse
0
2
4
6
8
10
91 96 01 06 11 16 21
x
Russell 2000 q
q S&P 500
0.0
0.2
0.4
0.6
0.8
1.0
1.2
91 96 01 06 11 16 21
%
t Russell 2000
t S&P 500
5 April 2021
U.S. Equity Strategy Navigator 68
Market Returns
Note: All returns include dividends except the Dow and NASDQ; Five-, and ten-year returns are annualized returns. Peak is Feb 19, 2020 and Trough is March 23, 2020.
Source: Dow Jones, NASD, Standard & Poor’s, Russell, FactSet, Credit Suisse
U.S. Equity Returns Including Dividends (%)
Index Peak - Trough Since Trough Mar-21 YTD 1 Yr 3 Yr 5 Yr 10 Yr
Broad Indices
Dow -36.7 77.4 6.6 7.8 50.5 9.6 14.7 10.4
S&P 500 -33.8 80.7 4.4 6.2 56.4 15.8 17.6 13.9
S&P 500 Equal Weight -39.0 100.9 6.0 11.5 71.6 14.5 16.4 13.2
S&P 100 (OEX) -31.4 76.3 4.2 5.1 54.4 16.8 18.2 14.2
Nasdaq -30.1 93.1 0.4 2.8 72.0 22.1 23.6 16.9
Russell Large Cap
1000 -34.6 85.9 3.8 5.9 60.6 16.4 18.1 14.0
Growth -31.5 86.7 1.7 0.9 62.7 21.7 22.5 16.6
Value -38.2 82.7 5.9 11.3 56.1 10.3 13.1 11.0
Russell Mid Cap
Mid -40.3 104.2 2.7 8.1 73.6 14.8 16.4 12.6
Growth -35.7 96.0 -1.9 -0.6 68.6 19.3 19.9 14.3
Value -43.4 106.2 5.2 13.1 73.8 10.8 13.5 11.2
Russell Small Cap
2000 -40.7 124.3 1.0 12.7 94.8 15.3 18.1 12.0
Growth -38.5 118.3 -3.1 4.9 90.2 17.7 20.2 13.4
Value -43.1 127.7 5.2 21.2 97.1 12.0 15.4 10.2
Index Value 2020 2019 2018 2017 2016 2015 2014
Broad Indices
Dow 32,982 7.2 22.3 -5.6 25.1 13.4 -2.2 7.5
S&P 500 3,973 18.4 31.5 -4.4 21.8 12.0 1.4 13.7
S&P 500 Equal Weight 5,752 12.8 29.2 -7.6 18.9 14.8 -2.2 14.5
S&P 100 (OEX) 1,802 21.5 32.2 -3.9 22.0 11.4 2.6 12.7
Nasdaq 13,247 43.6 35.2 -3.9 28.2 7.5 5.7 13.4
Russell Large Cap
1000 21.0 31.4 -4.8 21.7 12.1 0.9 13.2
Growth 38.5 36.4 -1.5 30.2 7.1 5.7 13.0
Value 2.8 26.5 -8.3 13.7 17.3 -3.8 13.5
Russell Mid Cap
Mid 17.1 30.5 -9.1 18.5 13.8 -2.4 13.2
Growth 35.6 35.5 -4.8 25.3 7.3 -0.2 11.9
Value 5.0 27.1 -12.3 13.3 20.0 -4.8 14.7
Russell Small Cap
2000 20.0 25.5 -11.0 14.6 21.3 -4.4 4.9
Growth 34.6 28.5 -9.3 22.2 11.3 -1.4 5.6
Value 4.6 22.4 -12.9 7.8 31.7 -7.5 4.2
5 April 2021
U.S. Equity Strategy Navigator 69
Market Returns
Note: All returns include dividends; Five-, and ten-year returns are annualized returns; Financials excludes REITs. Peak is Feb 19, 2020 and Trough is March 23, 2020.
Source: Standard & Poor’s, FactSet, Credit Suisse
U.S. Equity Returns Including Dividends (%)
Sector Peak - Trough Since Trough Mar-21 YTD 1 Yr 3 Yr 5 Yr 10 Yr
S&P 500 -33.8 80.7 4.4 6.2 56.4 16.8 16.3 13.9
Cyclicals
Energy -55.9 116.2 2.8 30.9 75.2 -5.5 -0.7 -1.6
Materials -36.1 109.2 7.6 9.1 78.3 14.0 14.3 9.5
Industrials -41.7 105.5 8.9 11.4 69.6 12.1 13.7 12.2
Discretionary -31.7 89.2 3.7 3.1 70.3 19.8 17.9 17.5
Financials -42.9 97.5 5.8 16.0 67.5 9.8 15.7 12.1
Technology -31.1 90.1 1.7 2.0 66.6 28.5 27.6 20.5
Comm. Svcs -28.6 75.7 3.1 8.1 59.1 18.7 15.6 16.5
Non-Cyclicals
Staples -24.0 43.8 8.2 1.1 28.4 12.1 8.2 11.6
Health Care -27.9 59.0 3.9 3.2 34.0 15.1 13.6 15.6
Utilities -35.6 47.8 10.5 2.8 19.4 12.0 8.9 11.3
REITs -37.7 60.6 6.8 9.0 32.0 12.3 8.1 10.0
Sector Weight 2020 2019 2018 2017 2016 2015 2014
S&P 500 100.0 18.4 31.5 -4.4 21.8 12.0 1.4 13.7
Cyclicals
Energy 2.8 -33.7 11.8 -18.1 -1.0 27.4 -21.1 -7.8
Materials 2.7 20.7 24.6 -14.7 23.8 16.7 -8.4 6.9
Industrials 8.9 11.1 29.4 -13.3 21.0 18.9 -2.5 9.8
Discretionary 12.4 33.3 27.9 0.8 23.0 6.0 10.1 9.7
Financials 11.3 -1.7 32.1 -13.0 22.2 22.8 -1.5 15.2
Technology 26.6 43.9 50.3 -0.3 38.8 13.8 5.9 20.1
Comm. Services 10.9 23.5 31.7 -7.7 20.1 12.1 14.3 7.4
Non-Cyclicals
Staples 6.1 10.7 27.6 -8.4 13.5 5.4 6.6 16.0
Health Care 13.0 13.4 20.8 6.5 22.1 -2.7 6.9 25.3
Utilities 2.7 0.5 26.3 4.1 12.1 16.3 -4.8 29.0
REITs 2.5 -2.2 29.0 -2.2 10.8 3.4 4.7 30.2
5 April 2021
U.S. Equity Strategy Navigator 70
Market Returns
Note: All returns include dividends; Five-, and ten-year returns are annualized returns. Peak is Feb 19, 2020 and Trough is March 23, 2020.
Source: Standard & Poor’s, MSCI, FactSet, Credit Suisse
Global Equity Returns Including Dividends (%)
Country Currency Peak - Trough Since Trough Mar-21 YTD 1 Yr 3 Yr 5 Yr 10 Yr
TSX US$ -42.8 99.2 4.6 9.5 63.4 10.8 13.0 3.4
Local -37.1 72.2 3.9 8.1 44.2 10.1 11.3 6.0
EAFE US$ -32.6 67.8 2.4 3.6 45.2 5.9 10.8 5.8
Local -30.4 53.4 5.4 7.7 37.1 6.8 10.0 7.7
Euro ex-UK US$ -33.5 71.6 3.3 3.6 49.5 7.5 11.9 6.5
Local -33.0 57.4 6.8 8.4 40.0 8.6 10.4 8.1
UK US$ -39.9 63.6 2.8 6.2 33.6 0.9 5.5 3.1
Local -32.3 36.3 4.1 5.2 20.1 0.8 5.6 4.8
Pac ex-Japan US$ -37.4 77.4 1.0 4.6 54.1 5.7 12.1 5.4
Local -31.7 49.6 2.2 5.8 34.7 6.1 11.0 7.3
Japan US$ -23.6 59.4 1.2 1.7 40.2 6.0 11.9 6.5
Local -23.3 58.1 5.0 8.9 43.5 7.2 11.2 9.7
EME US$ -31.1 78.1 -1.5 2.3 58.9 6.2 15.3 4.6
Local -27.5 70.4 -0.8 4.0 53.5 9.0 15.1 7.8
S&P 500 -33.8 80.7 4.4 6.2 56.4 15.8 17.6 13.9
Country Currency 2020 2019 2018 2017 2016 2015 2014 2013
TSX US$ 7.5 29.4 -16.4 29.4 25.4 -23.6 1.4 5.9
Local 5.6 22.9 -8.9 22.9 21.1 -8.3 10.6 13.0
EAFE US$ 8.3 22.7 -13.4 22.7 1.5 -0.4 -4.5 23.3
Local 1.3 22.3 -10.5 22.3 5.9 5.8 6.4 27.5
Euro ex-UK US$ 11.6 25.9 -14.4 25.9 0.3 0.1 -5.8 28.7
Local 2.1 27.5 -10.6 27.5 3.2 9.1 7.4 24.2
UK US$ -10.4 21.1 -14.1 21.1 0.0 -7.5 -5.4 20.7
Local -13.2 16.5 -8.8 16.5 19.2 -2.2 0.5 18.5
Pac ex-Japan US$ 6.6 18.5 -10.2 18.5 8.0 -8.4 -0.3 5.6
Local 0.4 18.2 -4.4 18.2 8.5 -0.8 5.8 16.5
Japan US$ 14.9 20.1 -12.6 20.1 2.7 9.9 -3.7 27.3
Local 9.2 18.9 -14.9 18.9 -0.4 10.3 9.8 54.8
EME US$ 18.7 18.9 -14.2 18.9 11.6 -14.6 -1.8 -2.3
Local 19.5 18.5 -9.7 18.5 10.1 -5.4 5.6 3.8
S&P 500 18.4 31.5 -4.4 21.8 12.0 1.4 13.7 32.4
5 April 2021
U.S. Equity Strategy Navigator 71
Credit Suisse Targets & Recommendations
S&P 500 Price and Earnings Targets
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse estimates
EPS Estimate Detail
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse estimates
S&P 500 Price Level Price % Change
Current (as of 03/31/2021) 3,973
2021 Year-End Target Price 4,300 8.2%
Operating Earnings EPS YoY Change
2019 Actual $164.58 1.0%
2020 Estimate $142.50 -13.4%
2021 Estimate $185.00 29.8%
2022 Estimate $210.00 13.5%
P/E Multiples on Credit Suisse Estimates P/E Change
Current on NTM EPS Estimate 20.8x
Year-end 2021 on 2022 EPS 20.5x -0.3x
P/E Multiples on Consensus Estimates P/E Change
Current on NTM EPS Estimate 21.8x
Year-end 2021 on 2022 EPS 21.3x -0.5x
2019 2020E 2021E 2022E
Dollars ($bn)
Sales 11,752 11,359 13,022 13,840
EBIT 1,868 1,585 2,050 2,303
Interest Expense 244 222 211 225
EBT 1,624 1,363 1,839 2,078
Taxes 257 177 290 348
Net Income 1,367 1,187 1,549 1,730
Per Share ($)
Sales/Share 1415.20 1365.00 1555.00 1680.00
EPS/Share 164.58 142.50 185.00 210.00
Contribution to Growth (%)
Sales 3.5 -3.3 14.6 6.3
Operating Margins -3.4 -11.8 14.7 6.1
Int & Tax -0.9 2.0 1.3 -0.7
Share Count 1.8 -0.2 -0.8 1.8
Chg in EPS 1.0 -13.4 29.8 13.5
Our target of 4,300 is consistent
with 8% upside
5 April 2021
U.S. Equity Strategy Navigator 72
Credit Suisse Targets & Recommendations
Quarterly EPS and Revenue Estimates ($)
Source: Standard & Poor’s, Refinitiv, FactSet, Credit Suisse estimates
Sector Recommendations
Source: Credit Suisse
Operating EPS Sales/share
2018 162.91 1,343.01
1Q 39.15 338.85
2Q 41.31 351.91
3Q 42.14 355.02
4Q 41.98 369.42
2019 164.58 1,415.20
1Q 33.13 332.59
2Q 27.98 315.61
3QE 38.69 346.71
4QE 42.70 370.09
2020E 142.50 1,365.00
1QE 42.00 350.00
2QE 44.00 380.00
3QE 49.00 400.00
4QE 50.00 425.00
2021E 185.00 1,555.00
2022E 210.00 1,680.00
Overweight Market Weight Underweight
Discretionary ex-Int. Retail Technology REITs
Industrials Communication Svcs Staples
Materials Internet Retail Utilities
Energy
Health Care
Financials
While we are positive on TECH+
longer term, near term, we expect
Financials, Health Care and
Cyclicals to outperform
U.S. Equity Strategy Navigator 73
5 April 2021
Companies Mentioned (Price as of 02-Apr-2021) 2U, Inc (TWOU.OQ, $40.49) 3M (MMM.N, $192.7) A O Smith (AOS.N, $67.87) ADT Inc (ADT.N, $8.46) AECOM (ACM.N, $64.38) AGCO Corp (AGCO.N, $144.42) Accenture Plc (ACN.N, $278.34) Activision Blizzard, Inc (ATVI.OQ, $95.54) Acuity Brands (AYI.N, $168.9) Adobe Systems Inc. (ADBE.OQ, $483.34) Air Lease (AL.N, $49.64) Air Products & Chemicals (APD.N, $284.9) Akamai Technologies, Inc. (AKAM.OQ, $102.83) Alaska Air Group, Inc. (ALK.N, $69.49) Albemarle Corporation (ALB.N, $150.74) Allegion (ALLE.N, $127.75) Alliance Data (ADS.N, $113.35) Allison Transmission (ALSN.N, $40.89) Alphabet (GOOGL.OQ, $2129.78) Alteryx (AYX.N, $84.64) Amazon com Inc. (AMZN.OQ, $3161.0) Amcr (AMCR.N, $11.66) Amdocs (DOX.OQ, $72.4) Amerco (UHAL.OQ, $614.25) American Airlines Group Inc. (AAL.OQ, $23.86) Ametek (AME.N, $128.66) Amphenol Corporation (APH.N, $67.05) Analog Devices Inc. (ADI.OQ, $160.38) Anaplan (PLAN.N, $54.92) Ansys, Inc. (ANSS.OQ, $351.85) Antero Midstream Corporation (AM.N, $9.12) Apple Inc (AAPL.OQ, $123.0) Applied Materials Inc. (AMAT.OQ, $141.52) AptarGroup, Inc. (ATR.N, $143.87) Ardagh Group S.A. (ARD.N, $25.5) Arista Networks (ANET.N, $308.04) Armstrong World (AWI.N, $92.48) Arrow Electronics, Inc. (ARW.N, $112.14) Ashland Global Holdings Inc. (ASH.N, $90.36) AspenTech (AZPN.OQ, $153.0) Atlassian Corp (TEAM.OQ, $223.06) Autodesk Inc. (ADSK.OQ, $283.9) Automatic Data Processing Inc. (ADP.OQ, $189.4) Avalara (AVLR.N, $139.71) Avery Dennison Corp (AVY.N, $188.07) Avnet Inc. (AVT.OQ, $42.02) Axalta Coating Systems (AXTA.N, $29.97) Axon Enterprise (AXON.OQ, $143.06) Babcock & Wilcox (BWXT.N, $66.87) Baker Hughes Inc. (BKR.N, $21.73) Ball Corporation (BLL.N, $86.27) Berry Global Group (BERY.N, $61.56) Black Kngt (BKI.N, $74.71) Boeing (BA.N, $252.96) Booz Allen Hamilton Holding (BAH.N, $81.71) Broadcom Ltd (AVGO.OQ, $475.95) Broadridge (BR.N, $154.92) CACI International, Inc. (CACI.N, $248.6) CDK Global (CDK.OQ, $54.16) CDW Corp (CDW.OQ, $169.44) CF Industries Holding Inc. (CF.N, $45.91) CH Robinson (CHRW.OQ, $97.15) CSX Corporation (CSX.OQ, $97.26) Cabot (CBT.N, $53.28) Cabot Oil & Gas Corporation (COG.N, $19.09) Cadence Design System (CDNS.OQ, $141.49) Carlisle Companies Incorporated (CSL.N, $167.05) Caterpillar Inc. (CAT.N, $232.74) Celanese Corporation (CE.N, $151.89) Ceridian HCM Holdings (CDAY.N, $84.58) Chemours (CC.N, $28.2) Cheniere Energy (LNG.A, $71.8) Chevron Corporation (CVX.N, $105.75) Ciena Corp (CIEN.N, $56.6) Cimarex Energy Co. (XEC.N, $64.42) Cintas Corp. (CTAS.OQ, $348.31) Cirrus Logic (CRUS.OQ, $87.61) Cisco Systems (CSCO.OQ, $51.98) Citrix Systems Inc. (CTXS.OQ, $140.32) Clean Harbors (CLH.N, $86.15) CoStar Group (CSGP.OQ, $861.38) Cognex (CGNX.OQ, $84.31) Cognizant Technology Solutions Corp. (CTSH.OQ, $78.88) Coherent (COHR.OQ, $258.53) Colfax (CFX.N, $44.36) CommScope Inc. (COMM.OQ, $15.57) Computer Sciences Corp. (DXC.N, $30.83)
U.S. Equity Strategy Navigator 74
5 April 2021
ConocoPhillips (COP.N, $54.02) Continental Resources, Inc. (CLR.N, $27.34) Copa Holdings (CPA.N, $80.92) Copart (CPRT.OQ, $112.61) Corelogic (CLGX.N, $79.45) Corning, Inc. (GLW.N, $43.99) Corteva, Inc. (CTVA.N, $46.74) Coupa (COUP.OQ, $262.28) Crane (CR.N, $95.02) Crown Holdings Inc. (CCK.N, $100.38) Cummins Inc. (CMI.N, $257.72) Curtiss-Wright (CW.N, $119.93) Deere & Co. (DE.N, $372.12) Dell Technologies (DELL.N, $89.08) Delta Air Lines, Inc. (DAL.N, $48.83) Devon Energy Corporation (DVN.N, $23.5) Diamondback Energy, Inc. (FANG.OQ, $81.22) DocuSign (DOCU.OQ, $206.29) Dolby Labs (DLB.N, $102.0) Donaldson Company, Inc. (DCI.N, $58.93) Dover Corporation (DOV.N, $137.93) Dow, Inc. (DOW.N, $64.6) Dropbox (DBX.OQ, $27.39) DuPont de Nemours, Inc. (DD.N, $78.13) EOG Resources, Inc. (EOG.N, $75.34) EPAM Systems, Inc. (EPAM.N, $399.99) EQT Corporation (EQT.N, $18.96) ETSY (ETSY.OQ, $208.2) Eagle Matls (EXP.N, $135.28) Eastman Chemical (EMN.N, $111.29) Eaton Corporation (ETN.N, $139.49) EchoStar (SATS.OQ, $23.99) Ecolab (ECL.N, $216.85) Elastic (ESTC.N, $114.53) Electronic Arts, Inc (EA.OQ, $137.96) Element Solution (ESI.N, $18.81) Emerson Electric (EMR.N, $90.41) Enphase Energy (ENPH.OQ, $162.69) Entegris (ENTG.OQ, $120.09) Equifax (EFX.N, $182.61) Equitrans Midstream Corporation (ETRN.N, $8.48) Euronet Worldwid (EEFT.OQ, $141.8) Everbridge, Inc. (EVBG.OQ, $125.45) Expeditors International of Washington (EXPD.OQ, $108.76) ExxonMobil Corporation (XOM.N, $57.39) F5 Networks, Inc. (FFIV.OQ, $211.11) FLIR Sys (FLIR.OQ, $56.87) FMC Corporation (FMC.N, $111.92) FTI Consulting (FCN.N, $142.17) Facebook Inc. (FB.OQ, $298.66) Fair Isaac (FICO.N, $500.95) Fastenal Co (FAST.OQ, $51.11) FedEx Corporation (FDX.N, $283.54) Fidelity National Information Services Inc (FIS.N, $144.05) FireEye (FEYE.OQ, $19.94) First Solar (FSLR.OQ, $86.15) Fiserv (FISV.OQ, $122.17) Five9 (FIVN.OQ, $164.22) FleetCor Technologies, Inc. (FLT.N, $279.5) Flowserve Corp. (FLS.N, $39.46) Fortinet, Inc. (FTNT.OQ, $186.39) Fortive (FTV.N, $70.9) Fortune Brands Home & Security (FBHS.N, $97.15) Freeport-McMoRan (FCX.N, $33.76) Gartner Inc (IT.N, $187.27) Gates Industrial Corporation (GTES.N, $16.35) Generac Hldg (GNRC.N, $323.8) General Dynamics Corporation (GD.N, $180.83) General Electric (GE.N, $13.28) Genpact (G.N, $43.2) Global Payments (GPN.N, $207.97) GoDaddy (GDDY.N, $80.21) Graco (GGG.N, $72.9) Graftech International Ltd. (EAF.N, $12.51) Graphic Pack (GPK.N, $18.35) Grubhub Inc. (GRUB.N, $63.38) Guidewire (GWRE.N, $102.46) HP Inc. (HPQ.N, $32.05) Halliburton (HAL.N, $21.92) Heico Corp (HEI.N, $127.98) Helmerich & Payne, Inc. (HP.N, $28.44) Hess Corporation (HES.N, $74.48) Hewlett Packard Enterprise (HPE.N, $15.7) Hexcel Corporation (HXL.N, $56.36) HollyFrontier Corporation (HFC.N, $38.02) Honeywell International Inc. (HON.N, $216.8) Howmet Aerospace (HWM.N, $31.82) HubSpot (HUBS.N, $485.85)
U.S. Equity Strategy Navigator 75
5 April 2021
Hubbell (HUBB.N, $190.39) Huntington Ingalls (HII.N, $204.23) Huntsman C (HUN.N, $29.47) IAA US (IAA.N, $56.26) IDEX (IEX.N, $212.25) IPG Photonics (IPGP.OQ, $217.8) ITT (ITT.N, $90.83) Illinois Tool Works, Inc. (ITW.N, $221.38) Ingersoll-Rand Inc. (IR.N, $49.61) Inphi (IPHI.OQ, $180.54) Intel Corp. (INTC.OQ, $64.55) International Business Machines (IBM.N, $133.23) International Paper Co. (IP.N, $54.29) Intuit Inc. (INTU.OQ, $395.23) JB Hunt Transport Services (JBHT.OQ, $169.8) Jack Henry & Associates (JKHY.OQ, $154.59) Jacobs Engineering (J.N, $129.95) JetBlue Airways Corporation (JBLU.OQ, $20.37) Johnson Controls Inc (JCI.N, $59.9) Juniper Networks (JNPR.N, $25.62) KLA Corporation (KLAC.OQ, $347.29) Kansas City Southern (KSU.N, $266.98) Keysight Technologies (KEYS.N, $143.79) Kinder Morgan Inc. (KMI.N, $16.84) Kirby Corporation (KEX.N, $60.23) Knight Transportation (KNX.N, $48.76) L3Harris Technologies, Inc. (LHX.N, $203.62) Lam Research Corp. (LRCX.OQ, $639.3) Landstar System Inc. (LSTR.OQ, $167.7) Leidos (LDOS.N, $96.45) Lennox International (LII.N, $316.74) Lincoln Electric (LECO.OQ, $123.71) Linde Plc. (LIN.N, $280.84) Littelfuse (LFUS.OQ, $267.4) Lockheed Martin Corporation (LMT.N, $371.02) Lumentum Hldg (LITE.OQ, $92.57) Lyft (LYFT.OQ, $64.64) Lyondell (LYB.N, $105.55) MKS Instruments (MKSI.OQ, $195.84) MSA Safety (MSA.N, $151.51) MSC Industrial Direct Co. (MSM.N, $91.29) Macquarie Infra (MIC.N, $32.18) Manhattan Assoc (MANH.OQ, $120.9) ManpowerGroup Inc. (MAN.N, $101.29) Marathon Oil Corporation (MRO.N, $11.79) Martin Mari Mat (MLM.N, $333.88) Marvell Technology Group Ltd. (MRVL.OQ, $49.66) Masco (MAS.N, $60.99) MasterCard Inc. (MA.N, $363.3) Maxim Integrated Products (MXIM.OQ, $95.45) Mercury Systems (MRCY.OQ, $72.42) Microchip Technology Inc. (MCHP.OQ, $160.17) Micron Technology Inc. (MU.OQ, $92.41) Microsoft (MSFT.OQ, $242.35) Middleby (MIDD.OQ, $165.49) MongoDB (MDB.OQ, $290.33) Monolithic Power (MPWR.OQ, $367.52) Mosaic Co. (MOS.N, $31.26) Motorola Solutions (MSI.N, $188.36) Murphy Oil Corporation (MUR.N, $17.42) NCR (NCR.N, $37.94) NVIDIA Corporation (NVDA.OQ, $552.47) National Instruments Corp. (NATI.OQ, $44.09) NetApp (NTAP.OQ, $73.65) Netflix Inc. (NFLX.OQ, $539.42) New Relic (NEWR.N, $62.9) NewMarket VG (NEU.N, $383.01) Newmont (NEM.N, $61.81) Nielsen Holdings Inc (NLSN.N, $25.33) Nordson (NDSN.OQ, $202.38) Norfolk Southern (NSC.N, $271.18) Northrop Grumman Corporation (NOC.N, $322.24) NortonLifeLock Inc (NLOK.OQ, $21.42) Nuance Commns (NUAN.OQ, $44.91) Nucor Corporation (NUE.N, $79.88) Nutanix (NTNX.OQ, $27.22) ON Semiconductor Corp. (ON.OQ, $42.89) ONEOK Inc (OKE.N, $51.35) Occidental Petroleum Corporation (OXY.N, $27.38) Okta (OKTA.OQ, $229.7) Old Dominion Freight Line (ODFL.OQ, $243.69) Olin (OLN.N, $39.26) Oracle Corporation (ORCL.N, $71.81) Oshkosh Corporation (OSK.N, $119.54) Owens Corning (OC.N, $93.79) PPG Industries, Inc (PPG.N, $151.96) PTC (PTC.OQ, $143.87) Paccar Inc (PCAR.OQ, $92.03)
U.S. Equity Strategy Navigator 76
5 April 2021
Packaging Corp. of America (PKG.N, $135.57) PagerDuty (PD.N, $41.17) Palo Alto Networks, Inc. (PANW.N, $328.05) Parker Hannifin Corporation (PH.N, $316.21) PayPal (PYPL.OQ, $247.54) Paychex (PAYX.OQ, $98.76) Paycom Software, Inc. (PAYC.N, $376.75) Paylocity Hldg (PCTY.OQ, $184.03) Pegasystems (PEGA.OQ, $117.99) Pentair Plc (PNR.N, $62.39) Phillips 66 (PSX.N, $83.16) Pioneer Natural Resources Company (PXD.N, $164.6) Pluralsight (PS.OQ, $22.42) Proofpoint (PFPT.OQ, $128.56) Pure Storage (PSTG.N, $21.97) Qorvo (QRVO.OQ, $192.9) Quanta Services (PWR.N, $89.17) Qurate Retail (QRTEA.OQ, $11.82) RPM International (RPM.N, $92.43) Raytheon Technologies (RTX.N, $77.28) RealPage, Inc. (RP.OQ, $87.67) Reliance Steel & Aluminum Co. (RS.N, $155.65) Republic Services, Inc. (RSG.N, $99.72) RingCentral (RNG.N, $305.01) Robert Half International (RHI.N, $77.66) Rockwell Automation (ROK.N, $263.44) Rollins (ROL.N, $34.83) Roper Tech (ROP.N, $410.35) Royal Gold (RGLD.OQ, $111.45) Ryder (R.N, $76.91) SS&C Technologies, Inc. (SSNC.OQ, $71.01) Sabre (SABR.OQ, $15.26) Salesforce.com (CRM.N, $218.72) Schlumberger (SLB.N, $28.1) Schneider National, Inc. (SNDR.N, $25.14) Science App (SAIC.N, $82.6) Scotts Miracle (SMG.N, $250.0) Sealed Air Corp. (SEE.N, $45.6) Sensata Tech (ST.N, $58.57) ServiceNow, Inc. (NOW.N, $507.01) Sherwin-Williams Company (SHW.N, $249.75) Silgan Holdings (SLGN.OQ, $41.99) Skyworks Solutns (SWKS.OQ, $187.7) Smartsheet (SMAR.N, $65.36) Snap-On (SNA.N, $231.74) SolarEdge Technologies (SEDG.OQ, $283.39) SolarWinds (SWI.N, $17.88) Sonoco Products (SON.N, $64.0) Southern Copper Corporation (SCCO.N, $69.41) Southwest Airlines Co. (LUV.N, $61.3) Spirit AeroSystems (SPR.N, $49.59) Splunk, Inc. (SPLK.OQ, $138.27) Square (SQ.N, $229.51) Stanley Black & Decker (SWK.N, $200.66) Steel Dynamics, Inc. (STLD.OQ, $50.97) Stericycle, Inc (SRCL.OQ, $68.11) Switch, Inc. (SWCH.N, $16.74) Synnex Corp (SNX.N, $116.98) Synopsys Inc. (SNPS.OQ, $254.23) Take-Two Interactive Software Inc. (TTWO.OQ, $180.15) Targa Resources Corp (TRGP.N, $32.1) Teledyne Tech (TDY.N, $417.43) Teradata Corp (TDC.N, $38.93) Teradyne Inc. (TER.OQ, $128.81) Texas Instruments Inc. (TXN.OQ, $192.06) Textron (TXT.N, $57.03) Timken (TKR.N, $82.16) Toro (TTC.N, $105.36) Trade Desk (TTD.OQ, $658.84) Trane Technologies (TT.N, $165.44) TransDigm (TDG.N, $603.71) TransUnion (TRU.N, $92.26) Trex Co (TREX.N, $94.79) Trimble (TRMB.OQ, $80.735) Trinity Inds (TRN.N, $28.49) TripAdvisor, Inc. (TRIP.OQ, $55.25) Twilio (TWLO.N, $352.04) Twitter (TWTR.N, $63.83) Tyler Tech (TYL.N, $431.82) Uber (UBER.N, $57.6) Ubiquiti Inc. (UI.N, $289.15) Union Pacific (UNP.N, $220.21) United Airlines Holdings, Inc. (UAL.OQ, $57.82) United Parcel Service Inc. (UPS.N, $171.28) United Rentals (URI.N, $331.71) Univar Inc. (UNVR.N, $22.0) UniversalDisplay (OLED.OQ, $238.14) VMware Inc. (VMW.N, $152.4)
U.S. Equity Strategy Navigator 77
5 April 2021
Valero Energy Corporation (VLO.N, $75.3) Valmont Industries (VMI.N, $241.69) Valvoline (VVV.N, $26.17) VeriSign Inc. (VRSN.OQ, $201.9) Verisk Analytics (VRSK.OQ, $179.81) ViaSat Inc. (VSAT.OQ, $50.34) Visa Inc. (V.N, $216.86) Vulcan Materials (VMC.N, $166.39) W. W. Grainger, Inc. (GWW.N, $406.35) W.R. Grace & Co. (GRA.N, $61.19) WEX (WEX.N, $216.44) Waste Management, Inc. (WM.N, $129.28) Watsco (WSO.N, $267.22) Wayfair Inc. (W.N, $338.0) WestRock (WRK.N, $52.19) Western Digital (WDC.OQ, $71.37) Western Union (WU.N, $25.15) Westinghouse Air Brake Technologies Corp (WAB.N, $78.99) Westlake Chem (WLK.N, $91.55) Williams Companies Inc (WMB.N, $23.9) Woodward Inc (WWD.OQ, $123.14) Workday Inc (WDAY.OQ, $254.97) XPO Logistics, Inc. (XPO.N, $127.48) Xerox (XRX.N, $24.59) Xylem (XYL.N, $104.64) Zendesk (ZEN.N, $139.8) Zillow Group (Z.OQ, $133.41) Zscaler (ZS.OQ, $175.77) Zynga Inc (ZNGA.OQ, $10.48) eBay Inc. (EBAY.OQ, $63.11) nVent Electric (NVT.N, $28.65)
Disclosure Appendix
Analyst Certification
I, Jonathan Golub, CFA, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.
As of December 10, 2012 Analysts’ stock rating are defined as follows:
Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark* over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most att ractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European (excluding Turkey) ratings ar e based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the an alyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin America, Turkey and Asia (excluding Japan and Australia), stock ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark (India - S&P BSE Sensex Index); prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst ’s coverage universe. For Australian and New Zealand stocks, the expected total return (ETR) calculation includes 12-month rolling dividend yield. An Outperform rating is assigned where an ETR is greater than or equal to 7.5%; Underperform where an ETR less than or equal to 5%. A Neutral may be assigned where the ETR is between -5% and 15%. The overlapping rating range allows analysts to assign a rating that puts ETR in the context of associated risks. Prior to 18 May 2015, ETR ranges for Outperform and Underperform ratings did not overlap with Neutral thresholds between 15% and 7.5%, which was in operation from 7 July 2011. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances. Not Rated (NR) : Credit Suisse Equity Research does not have an investment rating or view on the stock or any other securities related to the company at this time. Not Covered (NC) : Credit Suisse Equity Research does not provide ongoing coverage of the company or offer an investment rating or investment view on the equity security of the company or related products.
Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.
Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.
U.S. Equity Strategy Navigator 78
5 April 2021
Credit Suisse's distribution of stock ratings (and banking clients) is:
Global Ratings Distribution
Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 53% (32% banking clients)
Neutral/Hold* 34% (25% banking clients)
Underperform/Sell* 11% (20% banking clients)
Restricted 2%
Please click here to view the MAR quarterly recommendations and investment services report for fundamental research recommendations. *For purposes of the NYSE and FINRA ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdin gs, and other individual factors.
Important Global Disclosures
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