The ASX stock UBS thinks could almost double, plus 8 more top picks

“On the positive side is a capex cycle, fuelled by spending on data centres, mining, energy and defence. With an expanding pipeline of work to be done, we see scope for these channels of investment to remain a tailwind for Mining and Industrial companies. We recommend being overweight both these sectors,” said UBS strategists Richard Schellbach and Lily Huang.

“Conversely, we are underweight the Banks and Consumer sectors, where RBA rate hikes and souring sentiment are likely to drive further EPS downgrades.”

Given the above commentary, it’s unsurprising that a number of Mining names have made the top picks list for October. Somewhat less expected is the stock that UBS sees as having the highest upside potential.

1. Light & Wonder (ASX: LNW)

Light & Wonder has had a tough 2026 so far, down around 27% from its January high of $182. In an earlier note following LNW’s August results, UBS noted that the gaming company had committed to "rapidly delever" gearing below 3.0 times net debt to EBITDA by June 2027, putting debt repayment ahead of buybacks, which could build confidence and allow investors to “more closely compare LNW's valuation to Aristocrat's”.

“LNW's gearing is materially higher than ALL's, and it's a commonly mentioned reservation prospective investors have about LNW's risk profile. At the same time, the departure from 'aggressive buyback' would be a near-term drag on consensus EPSA given how accretive a buyback is at current prices,” UBS said, calling the move a “double-edged sword”.

The driving force behind LNW’s place on the list is that the valuation gap is just too wide to ignore, trading at around 11 times forward earnings, near-term earnings despite reiterated FY26 guidance, with consensus around 10% below the company's FY28 EBITDA target. UBS has put a target of $210 on LNW against a share price as of 9 October of $111 - roughly 89% expected return.

2. Megaport (ASX: MP1)

Megaport's case rests on its Latitude business, which UBS says is reshaping the earnings profile through long-duration AI compute contracts. UBS sees contracted EBITDA of $650 million, excluding GPU pool contribution and further Network growth, and flags upside risk to both its own FY28 EBITDA estimate ($697 million) and consensus ($716 million). 

The stock's FY27 price-to-earnings multiple of 84 times shows how much of the story is about growth, so further Latitude contract wins are the key catalyst. UBS' price target for MP1 is $29 per share, representing almost 50% upside on its current price of around $20.

3. Mineral Resources (ASX: MIN)

Mineral Resources has the opposite profile. UBS says the miner is entering a cash-harvest phase that should “support deleveraging and increased shareholder returns”, with governance concerns easing now that a succession plan is in place. UBS values the company at $72 against a current share price of around $49, or upside of 49%.

“Combined with a materially improved outlook, the stock's valuation appears increasingly attractive,” the UBS strategists said.

4. Charter Hall (ASX: CHC)

Trading at around 15.8 times near-term earnings against 18.0 times for the ASX 200, despite higher expected FY27 EPS growth of around 13% versus 8% for the market, Charter Hall is a value play. UBS argues its earnings will hold up better through a hiking cycle thanks to a high share of recurring income. The 34.5% expected return values the company at $24 against its current share price of just below $19.

5. Orica (ASX: ORI)

UBS has given Orica a $27 price target against a share price of around $23 for an expected growth of 21%. UBS expects resilient global mine production, supportive ammonium nitrate (AN) prices in a tightening market and the integration of recent acquisitions to drive around 7% annual EPS growth from FY25 to FY28.

The stock trades at roughly a 10% discount to the ASX 200 Industrials on a forward P/E basis, and UBS sees “re-rate potential upon a longer-term US AN supply resolution”.

6. Sigma Healthcare (ASX: SIG)

The Chemist Warehouse owner is seeing ongoing sales strength across both Australia and internationally, UBS said, from both like-for-like growth and new stores, along with structural tailwinds in pharmacy and health and beauty. It also expects gross margin expansion and operating leverage as cost management flows through.

At 36 times FY27 earnings, Sigma is one of the more expensive names on the list, so execution needs to hold, however UBS gives the company a $3.15 price target against a share price of $2.62, or an expected total return of around 23%.

7. Ventia (ASX: VNT)

The infrastructure services provider offers what UBS calls a defensive growth outlook, with 8% three-year EPS growth backed by infrastructure investment, government outsourcing and defence spending. It trades at an 18% discount to the ASX 200 Industrials and has the highest dividend yield on the list at 4.5%. The firm gives VNT a price target of $7 against a current share price of around $6, representing an expected return of 20%.

8. Insurance Australia Group (ASX: IAG)

UBS gives IAG a $9.10 price target against a share price of around $8 for an expected return of 17.5%.

“IAG is our top pick across the insurers, reflecting robust Home & Motor pricing (mid SD), asymmetric upside risk to margins from RI/CAT budget structures, leverage to higher bond yields and potential upside from its proposed RAC acquisition (or buyback if deal blocked).”

The ACCC's phase three review of the proposed RAC acquisition is due by the end of the calendar year.

9. BHP (ASX: BHP)

“We are constructive on the fundamental outlook for copper expecting a protracted period of elevated prices.”

What is a top picks list without BHP? UBS says around 55% of FY27 EBITDA is expected to come from copper, its preferred commodity, and it expects a protracted period of elevated prices. With a $62 price target against a $61.19 share price, the expected total return is modest, but the stock is up around 46% over the past year. UBS added that the quarterly production update on 20 October is the next catalyst.

Out of the list

UBS removed four stocks this month, but that doesn’t mean there is anything wrong with the company. AMP (ASX: AMP), for example, was taken off the list after outperforming (the bank’s share price has grown around 110% since it hit a low in mid-March) and being downgraded to Neutral on 7 October.

The firm is also still positive on Auckland International Airport (ASX: AIA), however UBS removed it from its list over uncertainty ahead of New Zealand's general election next month. Genesis Minerals (ASX: GMD) went on concerns that real risk-free interest rates have structurally stepped up, while CSL (ASX: CSL) was taken off simply because it reached UBS's price target.