Best Stocks to Invest in 2024
In this
post, we go through the top 14 stocks to buy in 2024. Visit 5 Best
Stocks to Invest in 2024 to view additional stocks included
in this list.
According
to investment consultancy Barclays, the year 2024
will rank among the worst for the world economy in the previous
forty years. According to Ned Davis Research, there is a 65% risk of a
devastating
worldwide recession.
Likewise, Fidelity International believes that a hard landing is unavoidable.
Wall Street consensus predicts that a modest recession will hit the world even though inflation has peaked as long as the Federal Reserve maintains its most aggressive fiscal policy in decades.
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Because
of the massive interest rate increases made by the Federal Reserve,
market analysts have reduced demand projections and cut their inflation
forecasts, believing that there is a 7 out of 10 chance that the US
economy will enter a recession in 2023.
According
to the consensus forecasts, the gross domestic product will only grow by a
pitiful 0.3% on average in 2023, with a quarterly annualized decline of 0.7% in
the second quarter and flat data in the first and third quarters.
About
two-thirds of the GDP, or consumer expenditure, is anticipated to expand very
slightly in the second half of 2023.
According
to Bill Adams, chief economist at Comerica Bank, on December 20 to Bloomberg:
“The US economy
is facing big headwinds from surging interest rates, high inflation, the end of
fiscal stimulus, and weak export markets abroad. Businesses have turned
cautious about adding to inventories and hiring, and will likely delay construction
and other CAPEX plans with credit more expensive and order books shrinking.”
People often
buy defensive assets like gold during recessions and times of general market
instability (see 13
Best Gold Stocks To Buy For Recession).
Similar
to this, investors aim to strengthen their portfolios with stocks that can
withstand recessions.
Costco Wholesale Corporation (NASDAQ: COST), Bank of America Corporation (NYSE: BAC), and UnitedHealth Group Incorporated are a few of the top recession stocks to purchase in 2023.
The Approach We Took
We looked
over 920 hedge funds and selected the top 14 recession-proof stocks.
These equities
are found in protective industries including the beverage, consumer goods,
healthcare, and financial sectors.
Many of
these businesses have a track record of paying out dividends on time and
holding steady market positions.
The list is organized by how many hedge funds each firm has as investors.
14 Best Stocks to Invest in 2024
14. Diageo plc
Holders of
Hedge Funds: 20
The Johnnie
Walker, Guinness, Tanqueray, Baileys, Smirnoff, Captain Morgan, Crown Royal,
Don Julio, Ciroc, Buchanan's, Casamigos, J&B, and Ketel One brands are
produced, marketed, and distributed by the London-based Diageo plc.
One of
the greatest stocks to buy before a recession arrives in 2023 is Diageo plc, as
the demand for alcohol spikes during these times.
Worldwide consumer demand for Diageo products is still strong.
Earnings have historically
fluctuated, but they have always recovered well, and they may continue to be strong
during the upcoming economic crisis.
On January
4, Sanjeet Aujla of Credit Suisse maintained the shares' Outperform rating
while increasing the price target for Diageo plc to 4,500 GBP from 4,400 GBP.
20 hedge funds have interests worth $527.4 million in Diageo plc, according to Insider Monkey's third quarter database, down from 22 funds with stakes worth $887.3 million.
The largest shareholder in the company is Tom Gayner's Markel
Gayner Asset Management, which has 1.35 million shares worth $229.2 million.
Diageo plc
is one of the finest stocks to buy during a recession, along
with Costco Wholesale Corporation, Bank of America Corporation, and
UnitedHealth Group Incorporated.
In its investor
letter for Q2 2022, Clearbridge Aggressive Growth Strategy has the following to
say about Diageo plc:
"Diageo is a significant international distiller and brewer that competes in the sizable ($500 billion+) and fragmented spirits market. We view Diageo as a steady compounder positioned for sustained, above-industry growth thanks to its portfolio of premium brands. Although we anticipate prospects for sustained margin expansion beyond this phase of recovery, the company's margins are still below pre-COVID levels in a number of geographic areas and should continue to improve as channels reopen. Although the alcohol sector is not immune to falling consumer expenditure or inflation, Diageo derives the majority of its revenues from the traditionally more resilient U.S. market. The business also has a number of margin-related tools at its disposal to help combat growing input costs.
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13. Church & Dwight Co., Inc.
Holders of
Hedge Funds: 40
Church &
Dwight Co., Inc., a New Jersey-based business, creates,
produces, and sells specialty, home, and personal care products.
Consumer Domestic,
Consumer International and Specialty Products Division make up its three
operating segments.
One of
the greatest stocks to buy this year that is resistant to recessions is Church
& Dwight Co., Inc.
With 27 years
of continuous dividend growth, the company is a dependable income stock to buy
in these uncertain market conditions.
On December
6, analyst Steve Powers with Deutsche Bank increased the company's price
objective for shares of Church & Dwight Co., Inc. to $90
from $85 and kept a Buy rating on the stock.
Church &
Dwight Co., Inc. was included in 40 hedge fund portfolios, up
from 32 in the previous quarter, according to Insider Monkey's Q3 data.
The company's
largest shareholder, with 8.45 million shares worth $604.2 million, is Terry
Smith's Fundsmith LLP.
In its Q3
2022 investor letter, Renaissance Investment stated the following for Church &
Dwight Co., Inc.:
Church &
Dwight Co., Inc. fell 22.7% after posting operating results
for the first quarter that fell short of forecasts. The management of the
company cited softness across their whole product portfolio, particularly for their
discretionary categories, as retailers attempt to reduce inventory levels in
order to lower their macroeconomic guidance.
12. Ross Stores, Inc.
Holders of
Hedge Funds: 43
Under the
Ross Dress for Less and dd's DISCOUNTS brand names, California-based Ross Stores,
Inc. distributes discounted retail clothing and home fashion accessories.
One of
the finest stocks to buy for the 2023 recession is it since people tend to shop
at discount stores during hard times.
As of December
19, despite the Christmas shopping season and ongoing inflationary challenges,
Ross Stores, Inc. is still seen as a retail industry winner.
On November 21, Barclays analyst Adrienne Yih reiterated an Overweight rating for Ross Stores, Inc. and increased the price target to $127 from $98.
The business' Q3 earnings report "was the second proof point that the balance of power has shifted in Off-favor," Price's according to the analyst.
At the end
of Q3 2022, 43 hedge funds were positive on Ross Stores, Inc., down from 46
firms the quarter before, according to Insider Monkey's database.
With 3.95
million shares worth $333 million, Jean-Marie Eveillard's First Eagle
Investment Management holds the largest investment in the company.
In their investor
letter for Q3 2022, Raymond James Investment Management stated
the following regarding Ross Stores, Inc.:
“Ross Stores,
Inc. topped the list of contributors as this discount
retailer of apparel and accessories recovered from oversold circumstances
following the publication of a disappointing quarter. Ross continues to use its
"packaway" inventory strategy, snatching up inventory when its buyers
spot deals in the market, then transferring savings to customers through low-cost
retail locations. Ross offers consumers great deals on clothing while executing
this approach.”
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11. O'Reilly Automotive, Inc.
Holders of
Hedge Funds: 48
The retailer and provider of automotive aftermarket parts, tools, supplies, equipment, and accessories in the US is O'Reilly Automotive, Inc.
The company anticipates revenue for the entire 2022 fiscal year to be between $14.1 billion and $14.3 billion, compared to the consensus estimate of $14.16 billion, and GAAP earnings per share to be in the range of $32.35 to $32.85, up from the prior estimate of $31.25 to $31.75 and the market consensus of $31.86.
Customers
often choose to fix their old cars during recessions rather than buy new ones,
which drives up demand for businesses like O'Reilly Automotive, Inc.
On January 5, Wells Fargo analyst Zachary Fadem maintained an Overweight rating on the stock of O'Reilly Automotive, Inc. and increased the price objective to $925 from $850.
The analyst thinks O'Reilly Automotive, Inc. under-earned in 2022 and 2023 despite industry-leading comps and positive share gains.
He sees the
advantages of a strong, needs-based category, little evidence of pricing
rollback, and potential tailwinds from share gains and improving margins.
48 hedge funds
were bullish on O'Reilly Automotive, Inc., compared to 41
funds in the previous quarter, according to Insider Monkey's third-quarter
database.
The biggest shareholder in the corporation is Charles Akre's Akre
Capital Management, which has 1.47 million shares worth $1 billion.
In its Q3
2022 investor letter, Aristotle Atlantic mentioned the following regarding O'Reilly
Automotive, Inc.:
“O'Reilly
Automotive, Inc., which is expected to be more resilient in a
the downturn in the economy outperformed the Consumer Discretionary sector. The company's
second-quarter earnings fell slightly short of consensus projections, but
despite challenging comparisons with the second half of 2021, the outlook for
the remainder of the year indicated sustained improvement. O'Reilly Automotive
recently revealed plans to expand into Mexico while also expanding its network
of stores. The industry in which the company competes has typically remained
reasonable during economic cycles.”
10. McDonald's Corporation
Holders of
Hedge Funds: 53
One of the finest stocks to buy for the 2023 recession is McDonald's Corporation, as demand for affordable meals spikes during unstable economic times and times of high unemployment.
Five of McDonald's Corporation's suppliers and the company inked a contract on December 15 to buy roughly 190 megawatts of electricity from Blue Jay Solar Farm.
All of the warehouses, distribution centers, and other parts of McDonald's Corporation's logistical supply chain for its restaurants in the United States will be powered by solar energy.
By 2030, the
corporation wants to cut greenhouse gas emissions by 36%, and by 2050, it wants
to be net zero.
On January 5, Barclays analyst Jeffrey Bernstein maintained an Overweight rating on the shares while increasing the price objective for McDonald's Corporation's $310 from $295.
The analyst anticipates discretionary restaurants to do well starting in 2023, with robust sales, inflated pricing, and reduced inflation.
McDonald's Corporation was included in 53 hedge fund portfolios, up from 50 in the previous quarter, according to Insider Monkey's Q3 data.
The company's biggest
shareholder, Bridgewater Associates, owned more than 2 million
shares, valued at $487.7 million.
9. The Coca-Cola Company
Holders of
Hedge Funds: 59
One of the best stock selections for a portfolio that will weather a recession is The Coca-Cola Company.
On February 16th, 2023, The Coca-Cola Company will declare its 61st consecutive dividend raise, making it a dependable dividend king to invest in.
Income equities act as a useful hedge against market turbulence since dividend payments bolster a portfolio hit by share price declines.
Over the past two years, the corporation has also boosted its
exposure to alcoholic beverages.
On December 20, Atlantic Equities analyst Edward Lewis stated that he anticipates a more difficult environment for the global consumer in FY23 due to high input costs and corporations' potential pricing increases in some circumstances.
His top beverage companies include The Coca-Cola Company, where he believes that category momentum, ongoing investment, and strong execution are the key factors driving growth.
The analyst has an Overweight rating and a $69 price objective on
shares of The Coca-Cola Company.
At the end of Q3 2022, 59 hedge funds were positive on The Coca-Cola Company, down from 60 firms the previous quarter, according to Insider Monkey data.
The largest
shareholder in the business was Warren Buffett's Berkshire
Hathaway, which owned 400 million shares worth $22.40 billion.
Asset management company ClearBridge Investments highlighted a few stocks in its Q2 2022 investor letter, The Coca-Cola Company being one of them.
The fund stated the following:
“"We have adjusted our portfolio over the past year to take the path we
see ahead. We made additions to the portfolio's more conservative segments,
including consumer staples like The Coca-Cola Company. We think that
Omicron, like Delta, represents a speed bump on the road to recovery rather
than a significant change in trajectory, even though the next month or two will
probably prove turbulent due to the Omicron variation. In 2022, we anticipate that
the economy will continue to grow strongly and that interest rates will increase.
We wouldn't be shocked if this change in direction is followed by some fits and
starts in the markets after a decade of extremely low rates. We think we are
well-positioned for the coming year because of our focus on pricing power,
deliberate sector exposure, value discipline, and a robust dividend profile.”
8. Abbott Laboratories
62 people
own hedge funds.
Healthcare products are developed, produced, and sold globally by Abbott Laboratories.
The business is divided into four segments: medical devices, established pharmaceutical products, diagnostic products, and nutritional products.
Healthcare is a defensive market industry, so businesses like Abbott Laboratories
continue to thrive even in the midst of a downturn.
On December
9, Abbott Laboratories announced a quarterly dividend of
$0.51 per share, an increase of 8.5% from its previous payout of $0.47.
Shareholders who had their records in by January 13 will get the dividend on February
15, 2023. Abbott Laboratories, a reliable dividend king has increased dividend payouts for 50 consecutive years and has provided 396 consecutive
quarterly dividends since 1924.
The price objective for Abbott Laboratories was increased by Barclays analyst Matt Miksic to $122 from $114 on January 4 while maintaining an Overweight rating on the stock.
The macroeconomic environment for medical devices and supplies is still
constricted, but the analyst is "generally constructive" about the
industry since she sees rising volume patterns, significant labor issues, and a "potentially stabilizing" supply chain and inflationary cost trends.
62 hedge fund portfolios included Abbott Laboratories at the end of the third quarter of 2022, up from 61 in the previous quarter, according to data compiled by Insider Monkey.
The largest shareholder in the company is Ken Fisher's Fisher
Asset Management, which has 9.12 million shares worth $883.2 million.
The following
is what Stewart Asset Management has to say in its Q3 2022 investor letter
regarding Abbott Laboratories:
“We also need
to draw attention to the irresistibly strong dollar as a result of the sharp
increase in interest rates. This lowers the reported earnings of American businesses
that export their goods and services. Earnings in foreign currencies are
converted into fewer dollars, which results in decreased earnings. The majority
of the businesses in your portfolios generate a sizable portion of their
profits from activities abroad. While a currency's strength or weakness has no
impact on a company's long-term viability or quality, it might have an immediate
impact on how much revenue is recorded. Because so many of our businesses
manufacture where they sell their products, the sharp negative impact of a
rising dollar is somewhat muted, making it difficult to predict this effect
with any degree of accuracy. A notable example is Abbott, among others.”
7. Walmart Inc.
68 people
own hedge funds.
Given its conservative character, Walmart Inc. is among the best companies for a portfolio that can withstand recessions.
Walmart Inc. declared on January 5 that its drone delivery program would be a success in 2022.
The company's 36 drone delivery hubs in seven states helped it complete more than 6,000 drone deliveries over the year.
The drone delivery was available in Arizona,
Arkansas, Florida, North Carolina, Texas, Utah, and Virginia as of the end of
2022.
On December 19, Karen Short of Credit Suisse began covering Walmart Inc. with an Outperform rating and a $170 price target, up from the previous $160.
The
analyst views Walmart Inc. as "meaningful" because it has been
gaining "a well-positioned defensive name in an uncertain macro
backdrop" market share since early 2021.
In the
third quarter, 68 hedge funds were long Walmart Inc., up from 67 firms the
previous quarter, according to Insider Monkey's database. Elite hedge funds
upped their total stakes from $3.78 billion in Q2 2022 to $4 billion in Q3
2022.
Asset management company ClearBridge Investments highlighted a few stocks in its Q2 2021 investor letter, Walmart Inc. being one of them.
The fund stated
the following: For both large and small businesses, the pandemic has presented difficulties. For large essential
retailers like ClearBridge Holdings Home Depot, Walmart Inc., and Costco, one
of the biggest difficulties has been finding enough
workers to meet demand in difficult circumstances. The pandemic saw the
implementation of improved pay systems by all three, with raises, unforeseen bonuses,
and other incentives helping to reward workers for their contributions in a
challenging environment. Walmart increased pay for 165,000 workers, including
some entry-level positions, to $15 an hour in September 2020. This was followed
in February by a rise of 425,000 employees, raising its average hourly wage
above $15.
6. The Procter & Gamble Company
69 people
own hedge funds.
An American multinational corporation called The Procter & Gamble Company sells branded consumer packaged goods all over the world.
It works via five divisions: Baby, Feminine & Family Care; Beauty, Grooming; Health Care; Fabric & Home Care.
A dividend king with 67 years of uninterrupted dividend growth is The Procter & Gamble Company.
Compared to key indices, the consumer staples
sector was clearly a winner in 2022 as investors adopted a defensive stance and
purchased shares of The Procter & Gamble Company.
On December
6, analyst Steve Powers with Deutsche Bank increased the company's price
objective for Procter & Gamble from $156 to $162 while maintaining a Buy
rating for the shares.
69 hedge funds were bullish on The Procter & Gamble Company at the end of September 2022, down from 71 firms the previous quarter, according to Insider Monkey data.
With
5.6 million shares valued at $712 million, Peter Rathjens, Bruce Clarke, and
John Campbell's Arrowstreet Capital is a significant
shareholders in the business.
One of the
top recession stocks to think about is The Procter & Gamble Company, along
with Costco Wholesale Corporation, Bank of America Corporation, and
UnitedHealth Group Incorporated.
Click here to read more and uncover the top five stocks to buy in 2024.
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