*This report launches our new monthly Credit Suisse Thematic Dashboard. The Dashboard monitors the performance and drivers of 10 key global themes of structural growth. We combine a bottom-up understanding of what companies best reflect a theme with the discipline of Credit Suisse HOLT’s scorecard. We revisit our Thematic 30, our most preferred stocks across all themes.
* Pay for what you (can’t) get. In our view, a world of shrinking real and nominal growth rates is one where you pay up for premium growth qualities. Our strategy team’s reports also focus on “growth” as a style (2016 Outlook: Themes, Sectors and Styles). The team’s recent equities downgrade, due to the paucity of earnings growth, further supports our focus on structural growth (Equities: reduce weightings into tactical bounce).
* Growth stock framework. To pick stocks and themes for the here and now, we apply the framework set out in Investing for growth 2.0. The two key attributes to isolate are “high quality” and “strong momentum" (earnings and price) as per the HOLT® scorecard. It guides the investor away from stocks and themes that may have structural merit but appear to be exposed to cyclical risks.
* Most preferred themes. As strong as the multi-year merits of all themes we highlight may be, our quality and momentum analysis encourages a focus right now on plays on the untapped potential of the internet (still), healthy living and ageing. Notably, these have strong emerging market and consumer components that we think are lost to many in the prevailing risk-off environment. Plays on the big data revolution and its convergence with industrial processes also stand out.
* “The Thematic 30”. Distilled from this approach, we have refreshed our global thematic stock list. We have isolated merits of quality and momentum but also looked away from purely HOLT metrics for sales and earnings growth above MSCI World. With an accent on quality, we also minimise financial and credit risk. New additions to the list are Alibaba, Alphabet, Bumrungrad Hospitals, Geberit, Han's Laser, Planet Fitness and SAP.