Analysts recommend these high-quality stocks.
The combination of persistent inflation and aggressive Federal Reserve interest rate hikes has created a difficult environment for investors in 2022. To make matters worse, the ongoing conflict in Ukraine has generated geopolitical uncertainty, energy market shortages and global supply chain disruptions. The risk of a global recession has been rising, and investors are understandably looking for safe stocks with stable, profitable businesses and impressive long-term track records. If the macroeconomic environment worsens, these stocks could be excellent safe havens. Here are seven safe stocks CFRA Research analysts recommend that also have S&P Capital IQ quality ratings of A+.
UnitedHealth Group Inc. (ticker: UNH)
UnitedHealth is the largest U.S. managed health care company. Analyst David Holt says UnitedHealth is expanding its Affordable Care Act marketplace presence into new states, which should help drive growth. In addition, Holt says the company’s $8 billion buyout of Change Healthcare will help UnitedHealth’s Optum health services business integrate and upgrade its technology, as well as cut costs. Holt says UnitedHealth is on track to achieve its goal of between 13% and 16% long-term earnings growth. Holt projects 12% revenue growth in 2022 and 8% growth in 2023. CFRA has a “strong buy” rating and $650 price target for UNH stock, which closed at $533.73 on Oct. 21.
Mastercard Inc. (MA)
Mastercard is a credit card leader and the second-largest global payment processor. Analyst David Holt says Mastercard’s diversification and scale allow it to navigate multiple economic conditions. Holt says Mastercard also has exposure to tech-centric trends, such as mobile payments and cryptocurrency. Mastercard should get a boost from the post-pandemic rebound in global travel, and Holt says the company’s asset-light business model will help it improve operating leverage over time. He projects 18% revenue growth in 2022 and 16% growth in 2023. CFRA has a “buy” rating and $440 price target for MA stock, which closed at $302.37 on Oct. 21.
Home Depot Inc. (HD)
Home Depot is a leader in U.S. home improvement retail. Analyst Kenneth Leon says a U.S. housing shortage has led to more Americans staying put and investing in home improvement projects. Leon says home remodeling demand is driving Home Depot’s professional segment sales growth, and a large project backlog suggests that trend will continue for the time being. Despite difficult year-over-year comparisons, Leon says all of Home Depot’s product departments reported positive growth in its fiscal second quarter. He projects 3.5% revenue growth in fiscal 2023. CFRA has a “buy” rating and $365 price target for HD stock, which closed at $275.53 on Oct. 21.
Accenture PLC (ACN)
Accenture is one of the largest information technology services companies, providing consulting, technology and outsourcing to clients around the world. Holt says Accenture is a high-quality company that is resistant to macroeconomic slowdowns. He says the company has a strong balance sheet, a proven long-term track record of above-average earnings growth and a client base that is resilient throughout the economic cycle. Holt says Accenture will continue to gain market share and is exposed to key long-term growth trends, including digital transformation, cybersecurity and cloud services. CFRA has a “strong buy” rating and $333 price target for ACN stock, which closed at $269.57 on Oct. 21.
Pool Corp. (POOL)
Pool is one of the largest swimming pool, pool equipment and irrigation products distributors. Analyst Zachary Warring says the company should benefit from a population movement to warmer climates over the next few years. In addition, homeowners currently have a large amount of home equity, enabling investments in pools and other outdoor remodeling projects. Warring says Pool’s impressive growth in the past two years demonstrates how much of a catalyst the remote work environment has been. He projects 15.2% revenue growth in 2022 and 6.6% growth in 2023. CFRA has a “buy” rating and $512 price target for POOL stock, which closed at $284.83 on Oct. 21.
Snap-on Inc. (SNA)
Snap-on produces hand tools, storage units and other equipment used by professional mechanics. Analyst Jonathan Sakraida says Snap-on’s tool division has positive momentum, and he anticipates the transportation and vehicle repair markets will remain strong as vehicles become increasingly complex and populations shift away from urban areas to regions that require personal transportation. Snap-on has reported double-digit growth in under-car equipment volume for six consecutive quarters. Sakraida projects 4.4% revenue growth in 2022 and anticipates an operating margin expansion to 20.7% in 2022 and 2023. CFRA has a “buy” rating and $248 price target for SNA stock, which closed at $207.75 on Oct. 21.
Watsco Inc. (WSO)
Watsco is the leading U.S. distributor of air-conditioning, heating and refrigeration equipment. Analyst Janice Quek says Watsco has both near-term momentum and long-term growth catalysts ahead. Quek says new regulations for heating, ventilation and air-conditioning equipment will force customers to update their systems, boosting demand. In addition, she says Watsco’s technology investments have increased its products’ efficiency, further differentiating it from competitors. Quek projects 16% revenue growth in 2022 and 2.3% growth in 2023 and says Watsco has flexibility to raise prices and expand margins. CFRA has a “buy” rating and $344 price target for WSO stock, which closed at $248.33 on Oct. 21.
7 safe stocks to buy with high quality ratings:
— UnitedHealth Group Inc. (UNH)
— Mastercard Inc. (MA)
— Home Depot Inc. (HD)
— Accenture PLC (ACN)
— Pool Corp. (POOL)
— Snap-on Inc. (SNA)
— Watsco Inc. (WSO)
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Update 10/24/22: This story was previously published at an earlier date and has been updated with new information.