2022 has become one of the most turbulent years for global markets, with inflation hitting both the United States and European economies, and the war in Ukraine launched gas, oil, and coal prices into the stratosphere. The signs seem clear – a recession is coming. All of these events combined have made waves of uncertainty in the global stock markets. The S&P 500 is down around 20% from its recent high, and the Nasdaq has been hit even harder: It is down 30% from its peak. Switzerland has also felt the brunt of this economic downturn, as the Swiss market index is 17.08% down from its value at the beginning of 2022.

Amidst this uncertainty, investors are looking to understand the future trends of stocks. How long will the bear market last and when is it time to re-invest? The market has already fallen a long way, but it could still fall further. That raises the question: Is this an average bear market that happens every three to five years, or could it be worse than what we have experienced in the past? It is difficult to know, but there is no doubt that smart investors are going to profit richly when the market does eventually turn.

It is important to be aware that financial markets do not discriminate between the wealthy and the poor. Anyone with a little cash can, with some professional knowledge or recommendations, coupled with a bit of luck, buy assets that could potentially bring a cash windfall.

Keeping in mind the uncertainty of future market conditions, we have selected an exclusive portfolio of stocks that we expect to perform well during this time of high inflation. So, let’s dive into this list of the top 10 Swiss stocks to buy and hold for a long term.

Ticker Name 10-year performance Market cap (CHF billion) P/E ratio
UBSG.SW UBS Group AG +21.7% 53.104 6.62
NESN.SW Nestlé S.A. +80.6% 299.47 18.43
ZURN.SW Zurich Insurance Group AG +72.8% 60.013 12.07
ABBN.SW ABB Ltd +42.9% 48.288 12.00
NOVN.SW Novartis AG +46.2% 162.312 7.56
HOLN.SW Holcim Ltd -29.0% 24.892 9.61
SIKA.SW Sika AG +51.7% 30.043 27.10
SLHN.SW Swiss Life Holding AG +308.3% 13.801 11.16
ROG.SW Roche Holding AG +76.0% 254.364 17.48
STM STMicroelectronics +492% 49.294 10.22

Source: Yahoo Finance (as of September 23, 2022)

Top 10 Swiss Stocks to Buy and Hold

  • 1. UBS Group AG (UBSG.SW)

    In 2022, after the sharp increase in consumer inflation, central banks began to actively raise their interest rates, which lead to volatility across global stock markets. The increase in the cost of credit significantly affects the financial performance of most companies. However, an exception to this rule is banking institutions, as they instead benefit from interest rate hikes.

    One of the best bank stocks that we recommend investing in the SIX Swiss Exchange is UBS Group AG – a flagship multinational investment bank and financial services company founded and based in Switzerland. Co-headquartered in Zurich and Basel, UBS Group AG maintains a presence in all major financial centers as the largest Swiss banking institution, and the largest private bank in the world.

    UBS Group AG delivers solid financial results with modest growth across the main financial indicators compared to 2021. In the second quarter of 2022, the bank finished with revenue of CHF 9.03 billion – 2.24% up year over year. Net income rose a solid 10.19% to CHF 2.11 billion. Diluted EPS also increased by 10.91% to CHF 0.61 per stock, while operating income rose by 8.75% to CHF 2.66 billion. Conversely, the net profit margin decreased by 4.27%, yet remains high at 21.75%.

    In summary, UBS Group AG could be a solid value stock with a PE ratio of 6.75. It has a consensus price forecast of 19.86 which offers a possible 36.30% rise in the stock price next year. The main issue for the stock price is that there may be a deepening of the economic recession in EU countries, which could initiate a worsening of the loan portfolio and decrease the bank’s operating margins.

  • 2. Nestlé S.A. (NESN.SW)

    Nestlé S.A. is a Swiss multinational food and drink processing conglomerate headquartered in Vevey, Vaud, Switzerland. The company has a long history and is the largest publicly held food company in the world since 2014, based on revenue as well as other metrics. Nestlé S.A. is also the largest publicly traded company in Switzerland with a market capitalization of around CHF 300 billion.

    Nestlé S.A. operates in the consumer defensive sector – the packaged foods industry. The company’s prospects appear tempting. Analysts expect earnings to grow by a solid 8.21% in the next three to five years. The financial results of the company in the first half of 2022 show its continuous growth trajectory.

    • Organic growth reached 8.1% with real internal growth (RIG) of 1.7% and pricing of 6.5%;

    • Total reported sales increased by 9.2% to CHF 45.6 billion (CHF 41.8 billion in the first half of 2022). Net acquisitions had a positive impact of 1.0%;

    • Underlying earnings per share increased by 8.1% in constant currency and increased by 7.3% on a reported basis to CHF 2.33. Earnings per share decreased by 9.5% to CHF 1.92;

    • Free cash flow was CHF 1.5 billion, as working capital and capital expenditure increased temporarily due to supply chain constraints and high volume demand;

    • There has been continued portfolio management progress. In Q2, Nestlé S.A. Health Science agreed to acquire Puravida in Brazil and The Better Health Company in New Zealand.

    The Nestlé S.A. stock price has experienced stable growth over the last five years. Investors benefit by around 40% or 8% per year (excluding dividend payments). The company pays modest dividends of CHF 2.80 per stock or 2.63% annually.

  • 3. Zurich Insurance Group AG (ZURN.SW)

    Zurich Insurance Group is a leading multi-line insurer that serves both the local and global markets. As of 2022, the Group ranks in the 80th position in Forbes Global 2000 list of the top public companies.

    Zurich Insurance Group has made a strong start to the year and expects to exceed all financial targets for 2022. The companies’ financial positions are ideal. Swiss insurers reported first-half core income at its highest level since 2008 and above analysts’ estimates. Zurich's life insurance business also posted a 13% rise in operating profit as a decline in COVID-19 claims offset headwinds from a stronger U.S. dollar. Zurich also announced a CHF 1.8 billion share buyback to minimize the impact of an anticipated earnings dilution stemming from the sale of its Germany life insurance back book. The company strongly believes that the positive operating trends witnessed in the first quarter, together with a strong balance sheet, will result in successfully concluding the current strategic cycle later this year.

    Zurich Insurance Group AG operates in the Financial Services Sector: Insurance – Diversified Industry. The sector and the industry will be on a growth trajectory in the next few years. Analytics predicts that company earnings will continue on a positive trajectory of 7.69% in the next three to five years.

    ZURN.SW is a solid-value stock with a PE ratio of 12.07. The company pays generous dividends of CHF 22 per stock or around 5.25% annually.

  • 4. ABB Ltd (ABBN.SW)

    ABB is a leading global technology company that energizes social and industrial transformation to achieve a more productive and sustainable future. By connecting software to electricity, robotics, automation, and motion portfolio, ABB pushes the boundaries of technology to drive performance to new levels. ABB announced in late March that its board of directors approved a new share buyback program of up to USD 3 billion. The new buyback program follows the completion of the company's previous program through which it repurchased approximately CHF 3.1 billion of its shares over a 12-month period.

    ABB stocks are traded not only at the SIX Swiss Exchange, but also at the New York Stock Exchange (NYSE) and other stock exchanges, which gives the company a high diversity of investment possibilities. On the NYSE it is a robotics stock with the lowest 12-month trailing price-to-earnings (PE) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low PE ratio indicates that investors are paying less for each dollar of profit generated.

    Until the end of the 2022 financial year, company management expects support from a solid order backlog and positive market momentum. For the third quarter, ABB anticipates double-digit revenue growth. It is further expected that the Operational EBITA margin will improve sequentially, excluding the 60-bps positive impact from special items in the second quarter. ABB expects to benefit throughout 2022 from strong market momentum and a solid order backlog. The Operational EBITA margin is expected to experience a steady margin improvement at a minimum of 15%, thereby inching toward the 2023 financial target. ABB also plans to spin off Accelleron into its own company and list it on the SIX Swiss Exchange in October, subject to shareholder approval. ABB shareholders would therefore receive one Accelleron share for every 20 ABB shares held, which may also influence positively the value of ABB’s stock.

  • 5. Novartis AG (NOVN.SW)

    Novartis is a famous Swiss-American multinational pharmaceutical corporation based in Basel, Switzerland, and Cambridge, Massachusetts. Novartis’ shares have outperformed the large-cap pharmaceuticals industry over the past year (+21.0% vs. -3.0%). The company owns and offers a wide variety of medical and pharmaceutical products, including particularly disruptive offerings.

    It is noted that Novartis’ second-quarter results were mixed. The company missed estimates for revenues while beating the same for earnings. Sales in innovative medicines rose 5% at constant currency, driven by the strong growth of Entresto Cosentyx, Kisqali, and Zolgensma. Sales in the Sandoz division also rose 5% as the business continued to improve as it recovered from the impacts of COVID to return to normal. The company maintained its guidance for sales and core operating income to grow in the mid-single-digit range in 2022.

    The company has a low PE ratio of 7.56. Together with a generous 4.09% dividend yield, Novartis stock could be a promising investment. The company's financial results in 2022 have so far underperformed the results of 2021, but this has already been priced into the stock and justifies a certain discount on its shares (down 22% from the peak).

  • 6. Holcim Ltd (HOLN.SW)

    Holcim Ltd is another company that is on a growth trajectory with inflation flying high. Together with its subsidiaries, it operates as a building materials and solutions company in Asia Pacific, Europe, Latin America, the Middle East, Africa, and North America.

    • Record H1 2022 net sales of CHF 14.681 million (+16.9%);

    • Record H1 2022 Recurring EBIT of CHF 2.173 million (+9.6%) and EPS of CHF 1.90 (+39.7%);

    • Accelerated portfolio transformation with the expansion of solutions and products and divestment of India;

    • Rating upgrades to BBB+ (Standard & Poor’s) and Baa1 (Moody’s);

    • Net sales growth guidance for the full 2022 year has been upgraded to at least 10% LFL.

    The building material industry is enjoying positive results in 2022 thus far. Construction spending on buildings is projected to increase by just over 9% in 2022 and another 6% in 2023, according to a new report from the American Institute of Architects (AIA).

    The PE ratio of the stock is only 9.61. The company pays generous dividends of CHF 2.20 per stock or 5.06% annually.

  • 7. Sika AG (SIKA.SW)

    The chemical industry has been performing well throughout 2022. One of the most prominent Swiss players in this industry is Sika AG – a flagship multinational chemical company with over 100 years of history supplying the building sector and motor vehicle industry. The company is headquartered in Baar, Switzerland.

    Analysts forecast that the global chemicals market is expected to accelerate its growth from USD 4.241 billion in 2021 to USD 4.620 billion in 2022 at a compound annual growth rate (CAGR) of 8.9%. This market is expected to grow by USD 6.371 billion in 2026 at a CAGR of 8.4%.

    The company’s financial results in Q2 2022 are incredible. Revenue is up 18.02% year-on-year to CHF 2.63 billion. Net income increased 21.12% to CHF 299.4 million. Diluted EPS growth was 20.51% to CHF 1.88 per stock. Net profit margin and operating income also increased by 2.61% and 2.08%. On the other hand, the company lost CHF 240.75 million in cash, but this had only minimally impacted its financial position.

    Sika AG is a good growth stock and the increase in the stock price is exceptional. If you were lucky to buy it in September 2012 at a price of approximately CHF 32 per stock, today you would have realized a profit of 564%.

    However, Sika AG does not come cheap, with a PE ratio of 27.10. It is also important to note that the company pays dividendsCHF 2.90 per stock or 1.40% annually.

  • 8. Swiss Life Holding AG (SLHN.SW)

    Swiss Life Holding AG operates in the financial services sector and the insurance diversified industry. The outlook for this sector is bright – the insurance market is expected to perform well in 2022-2023, and analysts estimate strong 6.1% nominal growth in total premiums (non-life and life) in 2022. In the non-life insurance space, analysts forecast a return to positive growth in real terms in 2023, with global premiums up 2.2% based on ongoing rate hardening, primarily in commercial lines.

    It is also expected that the impact of high-interest rates, stronger investment returns, and improved underwriting results will start to show through improved profitability next year. Life premiums are also anticipated to grow by an estimated 1.9% in real terms in 2023, with heightened risk awareness post-pandemic boosting demand for protection-type products, and as insurers increasingly go digital. The impact of rising interest rates will likely result in improved investment returns for life insurers in 2022, with a more significant boost in the medium to longer term.

    The financial indicators for Swiss Life Holding AG in Q2 2022 show continuous performance improvement – with revenue of CHF 5.94 billion (+2.41%), net income of CHF 318 million (+3.75%), diluted EPS up 5.18%, and net profit margin also growing by 1.33%. Despite this, operating income was down 13.86%, and net change in cash also decreased by CHF 698.5 million.

    Swiss Life Holding has a solid PE ratio of 11.16 with a high dividend yield of 5.2% as well as a solid dividend payment history.

  • 9. Roche Holding AG (ROG.SW)

    Roche Holding AG is another company with a historic background – more than 125 years in the pharmaceutical and diagnostic industries with operations in Switzerland, Germany, the United States, Austria, Netherlands, the United Kingdom, France, Belgium, and globally.

    Roche Holding AG's stock performed well over the last 10 years, providing its shareholders with more than 75% price growth gains (from September 2012 to September 2022) plus stable dividend payments.

    The company's financial indicators for Q2 2022 are impressive. Exceptional revenue of CHF 17.12 billion (up 6.55% year-on-year), net income of CHF 4.26 billion (+9.32% year-on-year), diluted EPS (up 16.34%), net profit margin (+2.59%), and operating income (+9.47%) – all evidence the company’s pristine financial health. The net change in cash decreased by CHF 1.27 billion, but this is not expected to result in any risks for the company because of exclusive revenue and income.

    Roche Holding AG represents the healthcare sector and drug manufacturers, which generally perform well in volatile and high-inflation environments. These companies are exceptionally profitable, have high margins, and are less dependent on supply chain breaks and external financing because of their impressive price power. The outlook for the pharmaceutical market is also very bright. Overall, the global pharma market is projected to reach USD 1.7 trillion in 2025, excluding vaccines. The researchers forecast a 3.26% overall drug inflation rate for healthcare systems in 2023. That is likely to accelerate the earnings of pharma companies.

    Roche Holding AG stocks are now trading with a 17.48 PE ratio, which is higher than average for drug manufacturers and pharmaceutical companies. However, the company has experienced stable growth for the last 10 years with a solid dividend yield of around 3%.

  • 10. STMicroelectronics N.V. (STM)

    STMicroelectronics N.V., along with its subsidiaries, designs, develops, manufactures, and sells semiconductor products across Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company operates through three main segments: the Automotive and Discrete Group, the Analog, MEMS, and Sensors Group, and the Microcontrollers and Digital ICs Group.

    In terms of valuation, STMicroelectronics is currently trading at a Forward P/E ratio of 10.22, signaling a discount compared to its industry's Forward P/E of 19.66. Additionally, the PEG ratio for STM stands at 2.21, a metric similar to the widely used P/E ratio but also considering the company's expected earnings growth rate. As of December 2023, the Semiconductor — General industry had an average PEG ratio of 2.77.

    While the historical EPS growth rate for STMicroelectronics is notable at 35%, investors should focus on the projected growth. The company's EPS is expected to grow by 2.8% in 2023, surpassing the industry average, which calls for EPS growth of -9.4%.

    As of the third quarter of 2023, year-over-year cash flow growth for STMicroelectronics was 68%, outperforming many of its peers and exceeding the industry average of 15.5%. While considering the current cash flow growth is important, it's equally valuable to examine the historical rate to provide context. The company's annualized cash flow growth rate over the past 3–5 years has been 26.9%, compared to the industry average of 13%. Additionally, the company's stocks offer a dividend yield of around 0.5%.

What are investors looking for when investing in stocks?

Investing in stocks provides a number of key advantages over other asset types. Firstly, this is a useful avenue to stay ahead of inflation. Historically, over the long term stocks have yielded a generous annualized return. For example, as of January 31, 2022, the 10-year annualized return for the S&P 500 was 9.91% – better than the average annualized inflation rate.

Secondly, it enables investors to access money quickly by offering higher levels of liquidity. Investing in a private business or directly in real estate, can take years to get your money back. With stocks, however, the market is open every weekday, which allows investors to buy and sell stocks anytime. It's worth noting that just because shares can be sold quickly does not mean they should be. After all, a stock may have risen temporarily right before it is sold, which results in money being left on the table.

Third, the barrier to entry is low – you do not need a lot of money to start investing in stocks. It only takes a few CHF to get a foot in the door, and by investing systematically over the longer term, an investor can multiply savings and gain capital.

What should an investor take into account when investing in stocks? 

Time is a key consideration. If an investor is purchasing stocks on their own, it is important to research each company to determine how profitable it may be before purchasing. It is essential to learn how to read financial statements and annual reports, then follow the selected company's news and developments. Investors should also monitor the stock market itself, as even the best company's price will fall in a market correction.

Investing in the stock market can be an emotional rollercoaster due to its volatility. Over time, it has always gone up, but not in a straight line. There have been plenty of corrections and crashes along the way, and investors need the fortitude to not freak out and panic sell when further crashes arise. For example, in 2022 Swiss Market Index lost around 20% (17.08%) of its capitalization.

Swiss Market Index falls 17.08% in 2022
Source: Yahoo Finance

Picking individual stocks is hard. Institutional and professional investors like Warren Buffett have long-term investment experiences and monitor the market full-time. They also have various sophisticated resources at their disposal that others do not, such as trading tools, financial models, and computer systems. Despite this, even these elite investors still make mistakes when it comes to picking stocks. Can you do better than Buffett?

Where can investors turn?

Taking all of the above factors into account, investing in stocks seems like a risky endeavor due to their inherent high volatility and irrational market behavior. As a recent example, we can dive into the situation with Facebook (Meta) stocks. Facebook is one of the five biggest US companies and presents a perfect financial situation, exclusive market share, and bright future prospects. Despite all of this, the stock lost around 27% of its value (USD 230 billion) in just one day on the 2nd of February 2022 after its earnings report did not meet analyst expectations.

In the face of such volatility, there are ways investors can reduce their investment risk, such as through diversification. As Ray Dalio said, diversification is the key (Holy Grail of Investing) especially when the stock market is not a safe enough heaven. Investors must be very careful when investing in 2022 and should look to diversify their portfolio not only with a range of different stocks, but also by finding other stable, profitable investment opportunities that the public market cannot provide.

Alternative investments are one area that many investors are increasingly turning to. This includes private equity, private debt, and private real estate. Alternative investments have several advantages over stocks:

  • Lower volatility due to lockup periods and professional investors who do not resort to panicking as small investors do on the stock exchange;
  • Lower correlation with public markets, which is the diversification and risk-reduction benefit that Ray Dalio recommends;
  • Competitive risk-adjusted returns. If you invested in the SMI index CHF 1'000 at the beginning of 1997 and the end of Q1 2022, your savings would have increased to approximately CHF 2’839 (considering all quarterly returns were compounded). If you invested the same amount in the CA US PE index (which calculates private equity investment outcomes), you would have a very impressive CHF 36’111 (considering all quarterly returns were compounded);
  • Better protection from inflation. The price and rent of luxury and other niche real estate segments tend to move with inflation.

Investing in alternative assets used to be difficult. Previously, these asset classes were the exclusive domain of the ultra-wealthy and institutional investors, and they were inaccessible to anyone else. Times have changed, as we live in a new era where alternative investment platforms are democratizing access to alternative investments. These platforms invest in alternative assets and then sell parcels to smaller investors to enable them to get their own piece of the pie. This enables smaller individual investors to invest in the pre-IPO phase of exciting companies including Nubank, Coinbase, and SpaceX, and enjoy profits that were once out of reach.

Moonshot is one such alternative investment platforms. Based in Switzerland, it brings together a wealth of private banking experience. Moonshot offers handpicked investments in individual private companies, such as OpenAI, Neuralink, SpaceX, and Synhelion SA, with high expected returns, as well as providing investment strategies, like pre-IPO, Web3, and Cleantech, which supply a diversified basket of companies around a particular theme. Moonshot has built a community of over 10'000 like-minded members. Becoming a Moonshot member enables you to benefit from exclusive investment opportunities in addition to regular presentations and the opportunity to exchange ideas.

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