The Federal Reserve Chairman, Jerome Powell, has cautioned that the economy may slip into recession as the central bank takes a hawkish stance to combat record-high inflation levels. Speaking at an economic policy conference in Europe, recently, Powell highlighted that the sky-high inflation poses a greater threat to the economy than a recession. As a result, the central bank will continue to be aggressive in hiking interest rates.
As concerns about the economic outlook grow, many investors are looking to park their investments in recession-proof stocks. However, identifying the right stocks that can shield your investment portfolio in a turbulent market can be a daunting task.
This is where the TipRanks Smart Score tool can help you. The tool takes into account various data-driven insights, making it easier for investors to identify stocks that have the potential to underperform or outperform the market.
Stocks with a “Perfect 10” Smart Score on TipRanks have delivered an alpha of 70.5% over the S&P 500 (SPX) index since 2016. This shows that the TipRanks Smart Score tool can guide you in picking highly profitable stocks, even in the times of distress.
Now, let’s look at two stocks with a “Perfect 10” Smart Score on TipRanks.
McDonald’s (MCD)
Founded in 1955, McDonald’s operates a global chain of quick-service restaurants. On April 28, the company reported that its first-quarter revenues grew 11% year-over-year to $5.67 billion. Meanwhile, its earnings stood at $2.28 per share. The figures were able to beat analysts’ expectations. Further, the company’s digital sales jumped 30% in the quarter.
McDonald’s stock offers a dividend yield of 2.16%, compared to the sector average of 0.54%. The company has been paying dividends for the last 13 years.
Consensus among analysts is a Strong Buy based on 22 Buys and three Holds. McDonald’s average price target of $281.61 implies upside potential of about 14%.
Broadcom (AVGO)
With more than 50 years in business, Broadcom provides semiconductor components and related software. It serves customers in a diverse range of industries, including wireless, broadband, and automotive.
Broadcom recently struck a cash and stock deal to acquire VMware (VMW) for about $61 billion. If approved, the VMware acquisition would enable Broadcom to further diversify its software business.
The company reported better-than-expected fiscal second-quarter 2022 results (ended May 1) on May 26. Broadcom reported a 23% year-over-year rise in revenues, which stood at $8.1 billion. Adjusted earnings came in at $9.07 per share. Further, the company anticipates revenues of $8.4 billion in the third quarter.
AVGO stock offers a dividend yield of 3.04%, compared to the sector average of 0.94%. The company has been paying dividends for the last 12 years.
As per TipRanks, the stock has a Strong Buy consensus rating based on 13 Buys. Broadcom’s average price forecast of $700.58 implies upside potential of about 43%.
Conclusion
McDonald’s and Broadcom have a track record of successfully managing through adverse economic cycles. Further, they also seem to be well-positioned to survive a recession.
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