Following the Federal Reserve’s most recent interest rate hike, investors are becoming increasingly worried that the central bank will push the U.S. into recession to tame high inflation. To protect their assets and potentially continue to see gains, investors are looking to pivot their portfolios into stocks that are poised to outperform during recessions. Some names, such as defensives, are well-positioned to withstand economic weakness. And, some are liked by Wall Street. To determine a list of such stocks to withstand a potential downturn from the tightening, CNBC Pro screed the S & P 1,500 for companies with at least five analysts covering them that have gained in value during the last three recessions – in 2020, 2007-2009 and 2001. Then, we found the stocks where analysts expect an upside of at least 10% in the next year. The list includes a solid group of defensive names and early cyclical plays. The stock that gained the most in the 2020 recession w as Royal Gold, Inc, a precious metals company. The defensive name also has a healthy increase to analyst’s target price – Wall Street sees the company surging more than 19% in the coming year. Southwestern Energy is the only energy company on the list, but it has the largest upside to its target price. Analysts see the stock surging more than 68% in the coming year, even after it’s gained 34% this year in energy’s boom. Some stocks on the list have slumped year to date, especially technology names Semtech and Skyworks, down nearly 67% and 37%, respectively. Healthcare companies Illumina and Edwards Life Sciences have fallen nearly 45% and 41.5% this year as well. That could provide good buying opportunities for investors looking to snap up shares at a discount. Analysts see Semtech gaining more than 43% next year, and put potential gains for Skyworks, Illumina and Edward Life Sciences at 12.3%, 18.6% and 16.8%. Technology company Qualcomm is an interesting name on the list, especially following its weak quarterly earnings where it offered downbeat fourth-quarter guidance and said it was implementing a hiring freeze at the start of the quarter. Still, Wall Street is bullish on the stock, which has shed more than 33% this year, and sees a potential 23% gain in 2023. Credit Suisse recently initiated coverage on Qualcomm with an outperform rating and nearly 20% upside . The analysts said that Qualcomm has more short-term security than other semiconductor names as investors have priced in all bad news. Overall, analysts are bullish on semis long-term. It could also be an early cyclical win, meaning that investors may bet on the stock when they see signs that an economic comeback is on the horizon. The Fed delivered a 0.5 percentage point hike Wednesday, raising its benchmark rate to the highest level in 15 years. The Federal Open Market Committee’s chart of expected rate movements also signaled more increases on the horizon – the terminal rate, where the Fed expects to end rate hikes, is now expected to hit 5.1% in 2023.
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