SUPERNEWS

Macro

Analyst-Favored Stocks Offer Defense Amid Market Downturn

Amid market sell-offs, analysts favor "fortress-like" stocks with growth and stability, including Gilead Sciences and AT&T, for portfolio protection.

By Max Weldon

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4/25, 11:25 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
Estee Lauder Companies, Inc.
First Solar, Inc.
Gilead Sciences, Inc.
Host Hotels
Interpublic Group of Companies, Inc.
AT&T Inc.
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Key Takeaway

  • Amid April's market pullback, CNBC Pro highlights seven S&P 500 stocks with over 4% dividend yield and at least 10% EPS growth as defensive plays.
  • Ventas (VTR) and Host Hotels & Resorts (HST) are spotlighted for their potential upside of ~18% and ~21%, respectively, despite recent underperformance.
  • AT&T (T), with the highest dividend yield at over 6.7% and significant EPS growth, is seen as a strong defensive stock with nearly 16% upside.

Market Correction Concerns Rise

Gross domestic product (GDP) figures released on Thursday fell significantly below economists' expectations, triggering a sell-off in morning trading. This downturn was exacerbated by a sharp decline in Meta's stock following its earnings report, contributing to broader market pressures. The Dow Jones Industrial Average and the S&P 500 each retreated by approximately 5% over the month, while the Nasdaq Composite experienced a nearly 6% drop. This recent pullback from earlier yearly highs has raised concerns over the potential onset of a more pronounced market downturn.

Seeking Shelter in Fortress-Like Stocks

In response to the market's volatility, CNBC Pro highlighted a strategy for investors to safeguard their portfolios by identifying "fortress-like" equities within the S&P 500. These stocks are characterized by a dividend yield of at least 4%, earnings per share growth of at least 10%, a consensus analyst rating of "buy," and an average analyst price target suggesting at least a 10% upside. Among the stocks meeting these criteria are Gilead Sciences, Host Hotels & Resorts, Interpublic Group of Companies, Kimco Realty, AT&T, VICI Properties, and Ventas, each offering a blend of growth and stability in uncertain times.

Analysts Highlight Opportunities Amidst the Downturn

Ventas, with its earnings per share growth exceeding 14% and a dividend yield of over 4.1%, alongside a buy rating and an 18% upside potential, stands out as a notable example. Despite a more than 13% decline in 2024, analysts like Evercore ISI’s Steve Sakwa see a positive earnings inflection point ahead. Similarly, Host Hotels & Resorts and AT&T have shown resilience, with analysts projecting significant upside potential for these stocks, underscoring the opportunities present in the market despite broader challenges.

Goldman Sachs and Bloomberg Weigh In on Profit Growth

Goldman Sachs has identified stocks with promising profit growth potential, emphasizing the importance of return on equity (ROE) as a profitability measure. The firm's ROE growth basket includes companies like Estée Lauder, GE Aerospace, and First Solar, each expected to significantly outperform their sector medians. Concurrently, Bloomberg's analysis reveals that tech giants have managed to maintain their stature despite rising interest rates, suggesting a nuanced market landscape where selective investment can yield substantial returns.

Street Views

  • Steve Sakwa, Evercore ISI (Bullish on Ventas):

    "Few large cap REITs exhibit high single digit compound AFFO growth potential over the next 3 years and fewer still are inflecting to such extent."