Morgan Stanley shares 14 safehaven stocks with highly-stable and quality earnings to bet on as investors continue to ignore a sharp pullback in earnings hurtling toward the market
to sweep across US corporations in the months ahead as the Federal Reserve keeps interest rates elevated and lending standards tighten.
That's bad news for stocks, says Wilson, who is warning that the S&P 500 could fall 29% from current levels as investors anticipate a softer landing than he envisions."We still expect a meaningful earnings recession this year that has yet to be priced," Wilson said in the bank's recent mid-year outlook note."This out-of-consensus earnings path is supported by our models and our view that policy will become more accommodative in 2024, not 2023.
But in this environment, there are areas of the market that are better to hide in than others, he said. For example, Wilson recommends investors stay in defensive sectors, like healthcare, consumer staples, and utilities. Defensive stocks tend to perform better than their cyclical counterparts in down economic environments. Wilson said his recommendation to stay defensive doesn't necessarily mean that the theme has upside, but that it will likely perform better than cyclical areas.
Another way to stay defensive, Wilson said, is to look to companies with stable and quality earnings. In the note, Wilson's team compiled a list of stocks they think fit that bill. It includes firms that are among the top 1000 US stocks by market cap; in the top-two quintiles of earnings stability; in the top-two quintiles of earnings quality; and are rated overweight by a Morgan Stanley research analyst.
United States Latest News, United States Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Buy this Brazilian oil stock on the strength of its dividend potential, Morgan Stanley saysAnalyst Bruno Montanari expects a 'compelling' dividend yield of 16%.
Read more »
WSJ News Exclusive | Top Morgan Stanley M&A Banker to Join Law Firm Paul WeissRob Kindler, a well-known Morgan Stanley deal maker, is leaving the company to join Paul Weiss, one of Wall Street's top law firms
Read more »
Veteran Morgan Stanley dealmaker Rob Kindler to join law firmRob Kindler, a top executive at Morgan Stanley , is leaving the investment bank after a 17-year stint to join a major law firm.
Read more »
Morgan Stanley's Robert Kindler tapped as Paul Weiss M&A chairMeet the Morgan Stanley rainmaker tapped to chair the M&A division of law firm Paul Weiss as fears of investor activism grow
Read more »
EUR/USD to fall to 1.02 by the end of the year – Morgan StanleyEconomists at Morgan Stanley discuss the EUR outlook. EUR/CHF to marginally increase toward parity We expect EUR/USD to fall to 1.02 by the end of the
Read more »
Morgan Stanley says this HVAC stock lacks near-term catalystsThe firm downgraded shares to equal weight from overweight.
Read more »