Wall Street wrapped up an ugly quarter on Friday, with the S & P 500 posting its third consecutive quarterly decline for the first time since 2009. As a new period begins, RBC Capital Markets named a slew of stocks it thinks are poised to weather the current macro climate. In the two trading days since third quarter ended, stocks have bounced back slightly, but it’s been a difficult year for investors. The S & P 500 remains down about 21%, even though it’s heading for its best 2-day gain day since 2020 . And last quarter’s issues remain close by. Inflation is still elevated near record highs and the war in Ukraine is pressing on. The Federal Reserve has already raised rates a total of 3 percentage points this year. But with persistant inflation, it has signaled that at least one more 0.75 percentage point hike could occur before the year closes, despite fears of a recession and calls for it to pump the brakes. RBC expects choppy waters ahead but expects its 30 high-conviction names offer strong upside potential for investors during these murky times. Here’s a selection of some of those stocks: Shares of Conocophillips have soared about 59% since 2022 started. Sanctions against Russia in the wake of its invasion of Ukraine have driven record oil and gas prices this year, which in turn has supported the stock. With a price target of $130 a share, the bank believes the stock could rally another 18% from Monday’s close. Analyst Scott Hanold indicated that Conocophillips is well positioned to outperform its large-cap exploration and production peers due to its low breakeven point. CrowdStrike ‘s shares have dropped more than 14% this year. RBC attributed a portion of the decline to investors steering away from growth stocks during the Fed’s tightening cycle. The stock could rally 39% from Monday’s close given RBC’s $236 price target. “We view CrowdStrike as a prime land-and-expand model benefiting from SaaS delivery and ability to rapidly add more modules with no extra configuration or consulting needed,” wrote analyst Matthew Hedberg. “The long-term power of the install base should lead to strong net expansion rates as the company cross-sells additional seats (endpoints) and modules.” Technology stock Palo Alto Networks is set up for a potential 37% gain from Monday’s close, based on RBC’s target. Shares of the cybersecurity company have held up relatively well compared with the broader S & P 500, with shares off by roughly 6%. Hedberg suspects the growing need for complex security systems will offer a tailwind for the stock going forward, positioning Palo Alto Networks as a market leader. On the consumer front, RBC added Burger King and Popeyes owner Restaurant Brands International to its top picks list for the quarter. To be sure, a slowdown in consumer spending patterns could threaten restaurant visits. Nonetheless, strong unit and revenue growth should support the stock’s valuation and RBC’s $70 price target implies 29% growth. “QSR is our top idea in the highly-franchised restaurant group, with our positive thesis underpinned by accelerating comp trends, the potential for improving unit development, upside from the new Burger King strategy, and compelling valuation, in our view,” the bank wrote. Investors have found some safety this year in defensive sectors like health care. That’s boosted shares of UnitedHealth by more than 3% since January. Operating across broad swaths of the U.S. health care industry, RBC expects the company offers an attractive long-term growth trajectory to investors. Shares of fertilizer producer Nutrien and utility company PG & E also made the list.
