Wall Street analysts named a handful of buy-rated stocks this past week as must-own stock picks for the second half of the year. These defensive companies have characteristics that will carry them through any additional economic and market turmoil, analysts said. CNBC combed through recent Wall Street research to find the top buying opportunities as the second half of 2022 gets underway. The picks include: AbbVie , Eli Lilly, Amazon , Kroger, Levi’s and Pioneer Resources. Amazon Shares of Amazon are down 34% this year, but Jefferies analyst Brent Thill said in a note earlier this week that investors shouldn’t give up on the stock. In fact, Thill is expecting a big second half for the e-commerce giant. He expects the stock to outperform through year’s end and cited a myriad of positive catalysts for his thesis, including easier comparisons with last year’s results, robust growth at Amazon Web Services and a discounted multiple. Thill admitted e-commerce traffic is down across many retail platforms, but says it really has nothing to do with market share losses. “Over the long term, we believe ecommerce will continue to gain share of broader retail and AMZN will continue to gain share within ecommerce, driven by unparalleled assortment, brand awareness, and logistics,” he wrote. Thill’s advice is to remain calm and take advantage of a rare buying opportunity, especially if shares remain range-bound. “We see an improved set-up in the second half as comps ease,” he added. Levi’s The denim jeans company was recently named a top second half pick by Bank of America. The firm said in a recent note that there are no shortage of positive catalysts ahead for Levi’s. “We think Levi’s (LEVI) has multiple growth engines to help navigate this challenging consumer backdrop,” analyst Christopher Nardone said. The company’s store count continues to grow, and Nardone sees Levi’s quickly taking market share. “Other growth drivers include gaining deeper penetration in tops and women’s, expanding internationally, and scaling their recent acquisition of Beyond Yoga,” he added. Get ready for the third quarter Oil prices show no signs of easing as China starts to reopen and supply worries persist The U.S. economy is entering the back half of 2022 on shaky ground Investors are counting on the 3rd quarter — typically a ‘no man’s land’ — to set up a year-end rally These stocks have major upside heading into the second half, Wall Street analysts say Nardone heaped praise on Levi’s strong management, noting that it is are well-positioned to weather an economic storm and has an experienced team to do so. Levi’s also boasts a very diverse supply chain, which is key in the face of rising competition, he said. Shares of the company are down nearly 36% this year, but Nardone says the stock is just too “compelling” to ignore at these levels. Kroger Inflation is permeating nearly every sector of the economy, but the grocery chain company is well-positioned, according to investment firm Scotiabank. “Over the last several years, the company has, through strong strategic execution, distanced itself from the competitive set and strengthened its market position,” analyst Patricia Baker wrote in a recent note to clients. The company was already off to a strong start in 2022 and the rest of the year should be even better for Kroger, according to the investment firm. “KR’s focused execution, sharp cost controls and competitive advantages, including data and own brands, permit it to continue to strategically invest in price to drive the business forward for the long term,” she said. Baker called inflation fears overdone and says she sees solid momentum as the grocer rolls out even more digital capabilities and fresh options for consumers. In addition, the company is coming off a strong fiscal first-quarter earnings report . In mid-June, it raised its forecast after beating on estimates on the top and bottom line . The firm noted that the results were particularly impressive as market conditions remain erratic. Shares of the company are up over 6% this year, but the stock undoubtedly deserves a higher multiple, Baker wrote. “We expect Kroger to maintain its solid position in the market,” she said. Amazon — Jefferies “Over the long term, we believe ecommerce will continue to gain share of broader retail and AMZN will continue to gain share within ecommerce, driven by unparalleled assortment, brand awareness, and logistics. … .We see an improved set-up in the second half as comps ease.” Levi’s — Bank of America “We think Levi’s has multiple growth engines to help navigate this challenging consumer backdrop. … Other growth drivers include gaining deeper penetration in tops and women’s, expanding internationally, and scaling their recent acquisition of Beyond Yoga. … LEVI recently announced long-term financial outlook is compelling, and in our view, should garner increased attention as the company continues to execute.” Pioneer Resources — Goldman Sachs “We, however, see attractive upside, with 29% total return to Large Cap Energy following the pullback, and highlight that buying each of the previous three equity dips yielded strong returns. On a risk-adjusted basis, our top picks include, but are not limited to: SU in Canada, PXD among US E & Ps. … We believe the underperformance at PXD represents an attractive entry point, especially with shares trading at around a 15% dividend yield per year, on average, on our annual estimates for 2022-2024.” AbbVie, Eli Lilly and Royalty Pharma — Morgan Stanley “During prior recessions, historical US drug volume growth slowed by ~1-3%, but remained positive. Revenue growth slowed slightly more from lower net prices due to patient assistance programs. Companies maintained prerecession operating margin and cash-flow profiles. Hence, we expect biopharma revenues will remain resilient if economic activity slows. We prefer growth over value, with our focus on Pharma companies that can grow in 2H of the decade (ABBV, LLY and RPRX ).” Kroger — Scotiabank “Over the last several years, the company has, through strong strategic execution, distanced itself from the competitive set and strengthened its market position. … KR’s focused execution, sharp cost controls and competitive advantages, including data and own brands, permit it to continue to strategically invest in price to drive the business forward for the long term. … We expect Kroger to maintain its solid position in the market.”
