Citi has named a number of stocks it believes could do well in the second half of 2022 as investors continue to navigate market uncertainty and strong inflation. Stock markets suffered heavy losses in the first six months of this year as a relentless sell-off brought major indices to their knees. The S&P 500 endured wild swings before closing the first half in bear market territory, leading the index to its worst performance since 1970. With the second half already underway, investors are bracing for continued volatility as Recession fears mount. That has put the focus on stock selection, according to Citi. “Although the equity market is likely to remain subject to macro considerations, stock-specific differentiation will be a critical focus,” Citi strategists led by Scott Chronert said in a June 2 report. 29. “We look forward to business models being tested,” they wrote, emphasizing the ability of business management to navigate a variety of issues, such as labor and supply chains. Read more ‘Dividend Aristocrats’: Strategists name high-yield stocks to weather a bear market Wall Street thinks these battered global stocks are poised for a rally Wall Street banks name their top global stocks for the second half and give three above 70% lead Chronert acknowledged the growing recession risks and put the odds of a global recession at 50%. The recession will most likely be a 2023 event, if it happens, he said. Meanwhile, rising consumer prices continue to weigh on investor sentiment, with decades-high inflation sweeping across several economies, including the US, Europe and parts of Asia. Stocks That Can Weather Higher Inflation Pricing power, which refers to a company’s ability to raise prices without losing business, gives companies an advantage amid rising prices. These companies tend to weather an inflationary environment better than their competitors because they can pass on higher costs to customers. Citi’s top picks of buy-rated companies with the most pricing power include Estee Lauder, Kellogg, Chipotle and Domino’s Pizza in the consumer space, as well as Thermo Fisher Scientific and HCA Healthcare in the healthcare space. The bank also likes Amazon, Microsoft, Atlassian and CrowdStrike in the tech sector. A host of financial stocks also appeared on the bank’s screen, including Allstate Corp, MetLife and Hartford Financial Services. “Highest Conviction” Names Citi also compiled a list of its “highest conviction ideas” – the bank’s top stock picks. They include chemicals company Linde, auto parts retailer AutoZone, Walmart, electronics maker Jabil, wireless carrier T-Mobile, cybersecurity company Fortinet, and biotech company Apellis Pharmaceuticals. Semiconductor equipment maker Lam Research was also listed by Citi, with the stock enjoying the biggest advantage over the bank’s price target among the bank’s top stock ideas. The stock closed at around $389 in Tuesday trading, representing 85.1% upside potential from Citi’s price target of $720.
Top Stock Picks for the Second Half of 2022
