Netflix and Other Stocks to Buy Before the Market Bottom
The stock market hasn’t hit its lows just yet, but there are stocks worth buying before the trough, says Morgan Stanley.
There is a debate on Wall Street as to whether the stock market is set to rally soon or still has room to fall. Stocks have dropped from their February highs as strong jobs and inflation data have worried investors the Federal Reserve will continue on its path of aggressive monetary policy.
Morgan Stanley analysts, led by Andrew Pauker, believe the stock market bottom hasn’t been seen just yet as more economic data and interest rate hikes loom.
“We expect the earnings backdrop to continue to deteriorate,” Pauker wrote in a research note. “The Fed is hiking rates at a recently prolonged pace into an earnings recession, which adds to the negative risk/reward backdrop we currently face.”
Even though there is a risk of stocks falling further in the weeks ahead, Pauker recommends 16 stocks to buy before the trough.
“Defensives, growth and quality tend to outperform into the trough. Of these three factors, we prefer quality and defensives within tech and the broader market into this cycle’s durable low as we believe they are more insulated from cyclical risks and less rate sensitive than growth,” Pauker said.
The 16 stocks he recommends buying before the bottom are Comcast (ticker: CMCSA), Liberty Media Formula One (FWONK), Netflix NFLX -1.00% (NFLX), CDW (CDW), IBM (IBM), Teradata (TDC), Visa (V), Microchip Technology (MCHP), Instructure Holdings (INST), ServiceNow (NOW), Workday (WDAY), Match Group (MTCH), Motorola Solutions (MSI), Crown Castle ( CCI ), T-Mobile TMUS +1.28% (TMUS), and Verizon Communications (VZ).
Pauker also recognizes the possibility of a new bull market following 2023 lows, and recommends 19 stocks to buy after the trough: Outfront Media (OUT), Walt Disney DIS -0.47% (DIS), Warner Bros. Discovery WBD -2.20% (WBD), Logitech International (LOGI), Seagate Technology Holdings (STX), Sonos (SONO), Tenable Holdings (TENB), EPAM Systems (EPAM), PayPal Holdings (PYPL), Lam Research (LRCX), Asana (ASAN), Atlassian (TEAM), Snowflake SNOW -0.03% (SNOW), RingCentral (RNG), Twilio (TWLO), Confluent (CFLT), Datadog (DDOG), HashiCorp (HCP), MongoDB (MDB).
Source: finance.yahoo.com
