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There’s a bunch of stocks that are tailor-made for these uncertain times, according to Wall Street analysts. CNBC Pro combed through top Wall Street research to find stocks to buy as macro uncertainty increases. These companies possess defensive characteristics, analysts say, and are must-owns. They include: Costco, Estee Lauder, Pacific Premier Bancorp, ON Holding and Phillips 66. Pacific Premier Bancorp DA Davidson is standing by shares of the Irvive, Calif.-based regional bank. “The company is well-positioned for current challenges facing the bank sector via the company’s risk averse management philosophy,” analyst Gary Tenner said in a note to clients. Davidson says Pacific Premier’s underperformance (it’s down almost 26% in the past month) is likely due to “PPBI’s more moderately asset sensitive position than other institutions heading into the Fed’s tightening campaign.” Still, with Pacific Premier shares down 23% this year, Tenner said investors should take advantage of the buying opportunity. “Above peer capital and loss reserves make PPBI an appealing safe haven name,” he added. Tenner went on to praise the bank’s growth discipline noting that it fits in well with these uncertain times calling Pacific Premier “a bank for all seasons.” “Pacific Premier is, in our view, a long-term core holding for institutional investors,” Tenner said. Estee Lauder Citigroup analyst Filippo Falorni said in a recent note to clients that the cosmetics maker remains one of the most heavily debated stocks on Wall Street. But Citi says worries about the stock’s valuation, conservative forward guidance and the effect of China’s reopening after Covid, are mostly bunk. “While we understand these concerns, we continue to expect a strong topline/margin recovery with a potential inflection in estimate revisions in 2H’23 as China re-opens and EL starts to cycle large inventory reductions,” he wrote. Falorni says Estee has a long history of robust growth and says the drivers will continue despite a tough macroeconomic environment. “Importantly, EL’s key engines of LT growth (China, travel retail, skin care) are all poised to accelerate from here, with a favorable margin impact as they all carry margins above corporate average,” he said. The stock is down 9.5% over the past year and Falorni has a price target of $295 per share. “Net-net, we reiterate our Buy on EL as a core long-term holding,” Citi said. ON Holding The Swiss shoe company is firing on all cylinders, according to Stifel analyst Jim Duffy. Shares of ON are up a whopping 81% this year, yet still have more room to run, Stifel says. The stock slumped 55% in 2022. “On is a unique premium brand with open-ended growth opportunities in the $300bn and growing global performance/lifestyle footwear and apparel market,” Duffy wrote. In addition, ON is coming off of robust fourth-quarter earnings results in late March. The company reported a strong top line beat along with solid guidance. Stifel says the stock is still undervalued. “Brand momentum, higher revenue base, and incremental investment in the business to support future growth justify a higher valuation,” he said. Duffy says there’s more to come, quipping that the the company’s growth outlook is “unreturnable for bears.” “Brand strength and extensibility should support strong growth and justify a premium multiple for ONON shares for multiple years, and we view ONON as a solid core holding for growth investors,” he added. Estee Lauder- Citi, buy rating “While we understand these concerns, we continue to expect a strong topline/margin recovery with a potential inflection in estimate revisions in 2H’23 as China re-opens & EL starts to cycle large inventory reductions. Importantly, EL’s key engines of LT growth (China, travel retail, skin care) are all poised to accelerate from here, with a favorable margin impact as they all carry margins above corporate average. Net-net, we reiterate our Buy on EL as a core long-term holding.” ON Holding- Stifel, buy rating “Brand momentum, higher revenue base, and incremental investment in the business to support future growth justify a higher valuation. … .On is a unique premium brand with open-ended growth opportunities in the $300bn and growing global performance/lifestyle footwear and apparel market. Brand strength and extensibility should support strong growth and justify a premium multiple for ONON shares for multiple years, and we view ONON as a solid core holding for growth investors.” Phillips 66- Raymond James, outperform rating “Overall, we still see PSX as a best-in-class, diversified business with a secure balance sheet that has weathered the storm. … .We still view PSX as a long-term core holding in energy. … .We believe PSX’s business should justify a premium valuation relative to the group, however, given the negative reaction to the DCP acquisition and chemical margin headwinds, we believe a lower multiple is appropriate for the time being.” Costco- JPMorgan, overweight rating “We believe COST continues to be a core holding given that its unrivaled value proposition (11% gross margins) to its fiercely loyal customer base (~90% renewal rate) and global growth opportunity (2-3% annually and likely double the current store base from here) are a rare combination in retail and consumer staples.” Pacific Premier Bancorp- DA Davidson, buy rating “A Bank For All Seasons Redux; Raising Estimates. PPBI is, in our view, a long-term core holding for institutional investors. The company is well-positioned for current challenges facing the bank sector via the company’s risk averse management philosophy. … .Above peer capital and loss reserves make PPBI an appealing safe haven name.”
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