Morningstar: Stock Picks Rated Buy Despite Inflation and Recession Fears

• Investors have every reason to be worried, from Russia’s aggression in raising rates to the Fed’s actions in Ukraine.
• Analysts recommend that you invest in companies with significant market share, such as Alphabet.
• Morningstar says these 10 stocks are great buys during volatile times.

The Federal Reserve could slow down its monetary tightening after months of rate increases to counter inflation that has been at an all-time high. Markets expect that the Federal Open Market Committee will slow down its rate hikes in December to 0.5 percentage points. They have already made four consecutive 0.75 percentage point increases. 

Minutes released on Wednesday indicated that slowing rates increases could be “soon to be appropriate.” This assessment was necessary due to the “uncertain lags, magnitudes associated with monetary policy actions on economy activity and inflation”

“Since 2020 headwinds created in the pandemic hampered market and sidelined a variety of industries as governments around the globe instituted lockdowns, imposed restrictions and hampered trade,” Morningstar analysts Ari Felhandler and Verushka Shetty wrote in a new report.

Investors are still trying to navigate murky macro waters, despite rampant inflation. They want to find safety from a global recession and geopolitical uncertainty which have wreaked havoc in the markets.

“And just as markets were looking to slowly recover after pandemic restrictions had been lifted, the Russian invasion Ukraine threw another wrench in the global economy, raising energy prices and creating inflationary tensions that have impacted both food and energy markets,” said the Nov. 22 note. The third quarter of 2022 was defined by a turbulent market that saw continued selloffs of tech and inflationary pressure. There are still fears of a recession.

Morningstar analysts recommend investing in companies with significant market shares like Alphabet, GOOGL, or Wells Fargo, WFG. Analysts estimate that these companies trade at substantial discounts. This “indicates money managers are putting an emphasis on blue-chip stock such as this in times of uncertainty.” GOOGL, for instance, is currently trading at $97 but Morningstar analyst Ali Mogharabi claims it’s worth closer to $160 per shares. 

Morningstar lists companies with “high-conviction purchases” for money managers who have made significant additions to portfolios despite market volatility. These 10 large-cap stocks cover a variety of sectors, including technology, finance, and energy.