As we have reported at length lately, most of the top Wall Street firms that we cover are making some final year-end portfolio moves to try to help investors finish out what has been for the most part a disappointing year. With both the Dow Industrials and the S&P 500 down for the year, we will need a solid rally to get the indexes back to the low to middle single digits.

In a new UBS research report, the Quality Grow at a Reasonable Price (Q-GARP) team makes some significant changes to the portfolio, adding some higher beta names while removing a huge pharmaceutical winner. The portfolio is handily outperforming the S&P 500 on a year-to-date basis, and it is an outstanding basket for aggressive growth investors looking for value.

Allergan

This top specialty pharmaceutical stock is removed from the portfolio after a spectacular run and a recent bid from U.S. pharmaceuticals giant Pfizer. Allergan PLC (NYSE: AGN) is focused on developing, manufacturing and commercializing innovative branded pharmaceuticals, high-quality generic and over-the-counter medicines, and biologic products for patients around the world.

Allergan markets a portfolio of best-in-class products that provide valuable treatments for the central nervous system, eye care, medical aesthetics, gastroenterology, women’s health, urology, cardiovascular and anti-infective therapeutic categories. It also operates the world’s third-largest global generics business, providing patients around the globe with increased access to affordable, high-quality medicines.

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UBS removed the stock basically due to the sale of the generics business to Teva Pharmaceutical and the gigantic bid from Pfizer. The company will remain on UBS’s most preferred health care list. However due to both of these factors, it falls outside of the quantitative goals for the portfolio.

The Thomson/First Call consensus price target for Allergan is $362.40. Shares closed trading on Monday at $298.71.
Accenture

This company was hit hard during the August sell-off, but it has roared back since and is added to the Q-GARP line up. Accenture PLC (NYSE: ACN) is a leading global professional services company that provides a broad range of services and solutions in strategy, consulting, digital, technology and operations. It combines unmatched experience and specialized skills across more than 40 industries and all business functions, underpinned by the world’s largest delivery network.

UBS notes that Accenture is a leader in information technology (IT) services and should deliver solid and consistent earnings growth over the next few years as it is well positioned to benefit from solid global IT spending trends and the migration of corporate and government IT infrastructure to the cloud.

The company recently announced it is launching five advanced analytics applications for the resources industries, which include utilities, oil and gas, chemicals and metals and mining companies, to enable insight-driven decision making for improved business outcomes. The new analytics applications are designed to support pricing, risk management, energy trading, credit collection and workforce planning decisions.

Accenture shareholders receive a solid 2.15% dividend. The consensus price target is $106.68. Shares closed Monday at $106.33.

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Red Hat

This top technology stock makes its debut on the Q-GARP portfolio. Red Hat Inc. (NYSE: RHT) is the world’s leading provider of open source software solutions, using a community-powered approach to reliable and high-performing cloud, Linux, middleware, storage and virtualization technologies. Red Hat also offers award-winning support, training and consulting services.

While the UBS team acknowledges that Red Hat trades at a high valuation of 37 times 12-month forward earnings estimates, which is way above the average P/E for stocks in the Q-GARP list of about 19 times, they went ahead and added the stock. The analysts think that Red Hat is well positioned to benefit from market share gains of the open source Linux operating system over time

The company also recently formed a partnership with once bitter rival Microsoft that would bring more flexibility to hybrid cloud enterprise environments. Specifically, the partnership allows cloud products running under the Linux operating system to integrate with Microsoft’s cloud computing platform Azure, a huge move after years of competition.

The consensus price target for the stock is set at $84.23. The shares ended Monday at $79.09.

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The Q-GARP portfolio has outperformed the S&P 500 by over 5% year to date, and there’s no reason to think that the performance will not carry through and continue in 2016. Strong growth ideas that aren’t overvalued are always among the most sought after on Wall Street.

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