These stocks hit hard by the Covid pandemic now look cheap based on future earnings, UBS says
(This story is for CNBC Pro subscribers only). Positive news around multiple vaccine candidates has helped boost the stock market in recent weeks, but the economic reopening does not appear to be fully priced in for some stocks, according to UBS. Researchers at the firm looked for stocks that had been hit hard during the pandemic, and their stock price didn't reflect the earnings potential in 2022 and possible margin improvement. "We present a list of stocks that have been relatively hard hit by COVID impacts but are more attractive in the early stages of normalization," the firm said in a note to clients. Many of the stocks on the list are tied to the travel industry, which has been hit hard by movement restrictions between and within countries during the pandemic. Two of the travel names that made the list were TripAdvisor and Choice Hotels . Both stocks had big rallies on Nov. 9 after positive results from Pfizer's phase-three trial were announced, but they have still underperformed the S & P 500 by more than 10 percentage points so far this year. TripAdvisor's shares remain in negative territory for 2020. Another area that is expected to benefit greatly from a vaccine is health care, as the pandemic has limited the amount of medical procedures that would typically take place. UBS identified Zimmer Biomet as an underpriced stock in the space. The company, whose products include artificial hips, saw its revenue fall 38% year-over-year during the second quarter before rebounding over the summer. The stock is down 2% year to date. Though tech broadly has been the best performing sector this year, some names in the space made the UBS list. One of those is Alliance Data Systems , whose shares are down more than 26% this year. The company was one of several removed the S & P 500 earlier this year , likely hampering its rebound from the spring lows for the stock market.

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