JEFFERIES: Buy these 18 stocks that are less vulnerable to a US recession because of their strong businesses overseas
The firm suggests buying companies with strong balance sheets and those with strong overseas sales.One of the surprising elements of the surprising rally in stocks in 2023 is that cheap stocks with relatively shaky balance sheets are doing great.
Jefferies SMID Cap Strategist Steven DeSanctis says that those less-expensive stocks and indebted stocks can't outperform forever. So, DeSanctis doesn't think that buying cheap stocks will be a route to good returns. What might work better? DeSanctis suggests going in the opposite direction and looking at companies with stronger balance sheets, as wider credit spreads are going to be an obstacle for firms with more debt.
He also focused on companies whose stock performance is inversely correlated with that of the US dollar, meaning they tend to rise when the dollar gets weaker and tend to fall when it gets stronger.over the last three months and is well off its highs from September and October. That's good for companies that make larger proportions of their sales overseas, as their profits rise when they're converted from foreign currencies into US dollars.
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