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As investors weigh the possibility of a US recession or a soft landing, there are certain stocks that should perform better in either scenario, according to Evercore ISI. A soft landing will happen if the Federal Reserve can bring inflation down without triggering a recession. The central bank began raising rates in March 2022, with the latest 0.25 percentage point increase occurring at the February meeting. However, Evercore ISI is among the Wall Street companies that have a recession baseline in the second half of the year. “Stock picking is critical given the potential economic weakness,” Julian Emanuel, head of the firm’s equities, derivatives and quantitative research, said in a Sunday note. In this environment, there are two topics that it focuses on. One of them is a stronger-than-expected reopening of China after the Covid lockdown, which will benefit US-listed Chinese companies and US companies that sell to China, Emanuel said. The other is what he calls “valmentum stocks” — value stocks with momentum — that have high free cash flow returns and strong earnings per share performance, he added. “U.S. All-Weather Economic Sector stocks focused on these topics and in the soft landing beneficiary sectors of Cons. Disc. (EVR ISI Strategy O/P), Tech and Comm. Svc. can be set to outperform as in a “soft landing”. or more complex environment,” wrote Emanuel. Here are some of the names that made the list. Booking Holdings is one of Evercore ISI’s valmentum stocks, which could be up about 15% from Friday’s close, based on the firm’s $3,000 price target. The online travel company is capitalizing on strong travel demand by reporting fourth-quarter earnings and revenue in February. Its gross travel bookings for the quarter were $27.3 billion, up 44% from the fourth quarter a year earlier. Over the same period, the number of room nights booked increased by 39%. “We are encouraged by continued strong and robust traveler demand last year and into the new year, which we believe indicates a strong desire from our consumers to use our platforms when booking their travels,” said Booking Holdings CEO Glenn Vogel. income release. Shares are up 30% this year. Chinese e-commerce giant Alibaba also recently reported record earnings for its fiscal third quarter. In January, the Wall Street Journal reported that activist investor Ryan Cohen, known for betting big on Bed Bath & Beyond shares and chairing GameStop, had amassed a stake in the company. Alibaba shares are up nearly 2% year-to-date but below 2020 highs. The stock has lost nearly 24% over the past three years. Casino operators Wynn Resorts and Las Vegas Sands are two American companies that generate income from their offices in Macau, China. In recent reports, both companies were optimistic about the return of the area after three difficult years due to Covid. “The recent moves by the authorities in Macau and mainland China to open up the market give us great confidence that the difficulties are behind us and the near future will be much brighter,” Wynn CEO Craig Billings said during an earnings call in early February. . “Macau has a bright future,” said Robert Goldstein, CEO of Las Vegas Sands, adding that “in the coming years, it will develop into a dynamic, diversified travel market.” Wynn is up more than 40% year-to-date, while Las Vegas Sands is up more than 26%. Finally, Apple shares are up more than 16% this year. The tech giant reported a decline in profits and earnings in January, citing a strong dollar, manufacturing problems in China and the overall macroeconomic environment. More recently, stocks received support after two calls from Wall Street. On Monday, Goldman Sachs initiated coverage on Apple shares with a Buy recommendation and $199 target price, suggesting 31.8% upside from Friday’s close. Last week, Morgan Stanley raised its price target to $180, suggesting 19% upside from Friday’s close. — Michael Bloom of CNBC provided the coverage.
Credit: www.cnbc.com /
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