20 Stock Experts Say They’ll Help Investors Beat a Bear Market

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With stocks headed for one of their worst years in recent memory amid concerns about persistent inflation, Federal Reserve rate hikes and growing recession risks, major Wall Street firms say investors should turn to defensive stocks with stable margins and cash flow that should be able to weather a bear market.

key facts

Evercore ISI analysts argued Thursday that several bank stocks will benefit from higher rates, after Fed officials indicated they are prepared to continue to aggressively raise interest rates to fight inflation, according to Fed minutes. latest central bank policy meeting.

The firm’s top picks include Wells Fargo, First Republic Bank, Comerica and KeyCorp, all of which have more upside potential as rates rise, with balance sheet growth in loans and deposits while also having “less risk.” credit rating lower than its peers if economic trends weaken. ”

Analysts at Jefferies say investors hoping to bet on the “resilient” US consumer should look no further than casual dining stocks, which are well-positioned to capitalize on the recent shift in consumer spending from goods to services.

While the inflation outlook remains a concern, restaurant chains won’t see sales take a big hit and should still benefit from robust consumer spending, the firm says, pointing to Dave & Buster’s, the owner of Outback Steakhouse, Bloomin’ Brands and the Cheesecake Factory as prime examples.

Earlier this week, Morgan Stanley’s Chief US Equity Strategist Mike Wilson predicted further market sell-off due to growing recession risks, though he identified several “high-quality companies that can potentially weather this bear market”, particularly those with strong free cash flow.

It lists five defensive stock picks in the health and consumer sectors that should deliver “growth at a reasonable price,” including Exxon Mobil, Coca-Cola, Deere & Co, Abbott Laboratories and CVS Health.

What to watch for:

UBS strategists warned that stagflation (high inflation and slowing economic growth) is likely to persist, especially as markets have not yet priced in this. The bank recommends investors look for stocks with stable margins to weather stagflation, including consumer stocks such as Costco, Kroger, eBay, and Procter & Gamble, as well as Microsoft, Johnson & Johnson, Pfizer, Abbott Laboratories, Chevron, and Exxon Mobil. .

Key Background:

Inflationary pressures and the prospect of rising rates have led to heightened recession fears that have hit investor confidence. Stocks have posted seven straight weeks of losses, with the S&P 500 briefly dipping into bear market territory last Friday and currently sitting more than 15% below its all-time highs in January. The latest Fed minutes released on Wednesday show that there is a growing consensus on the growing need for tighter monetary policy, with most central bank officials agreeing that raising interest rates in intervals of 0.50% in the next meetings in June and July.

Other readings:

Here’s how long it takes for stocks to recover from bear markets (Forbes)

Retail stocks recover, but “feast or famine environment” may linger amid shift in consumer spending, experts warn (Forbes)

Stocks rise after Fed minutes showed the central bank will continue to hike rates aggressively (Forbes)

Warren Buffett’s $51 Billion Stock Buying Spree: Here’s What He’s Buying (Forbes)

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