Credit Suisse recommends stocks with a feature favored by Warren Buffett for investors navigating rising risk in equity markets. The firm hopes that companies with “economic moats” can help investors protect their portfolios from increased economic uncertainty. It’s a term popularized by the legendary investor that refers to a company’s ability to maintain competitive advantages over its peers, such as a better business model or scale. “The most important thing [is] trying to find a business with a wide, durable moat around it … protecting a fantastic economic castle with an honest gentleman in charge of the castle,” Buffett said at a 1995 meeting, according to CNBC’s Warren Buffett Archive. Credit Suisse identified the fund -increasing opportunities in companies that have high barriers to entry, as macro risks rise.The firm’s strategists pointed to aggressive action against inflation by central banks across the world, as well as growing risks to 2023 profit estimates, and advised investors to underweight the stock. “Our economists are not ruling out a recession and forecast US GDP growth to be 0.9% in 2023, versus -0.2% in the euro zone,” analyst Richard Kersley wrote in a Thursday note. Still, there are opportunities in protected companies. moats, which have “a superior ability to innovate” with a strong pricing power. These are the names. Shares of Air Products & Chemicals could rise more than 20% from here, as the company has “among the most resilient business models” as it is difficult to transport gases over long distances, according to Credit Suisse . The firm has a $295 target price on the company, and the stock closed Wednesday at $241.46. Hershey was endorsed by the firm as “poised for one year of above-average (5%) growth in 2022” due to its leading confectionery market share, according to the note. Credit Suisse has a $250 price objective on the company, which implies an 11.9% upside from Wednesday’s close of $223.41 per share. “Market share gains are likely to persist through 2022 and likely beyond as retailers have given the company more shelf space,” the note read. McDonald’s is “well positioned” to perform regardless of the macro context due to its leading value proposition, according to Credit Suisse. The fast food company is also recovering in overseas markets, the note read. Other companies with moats in America include Microsoft, Nextera and Autodesk. —CNBC’s Michael Bloom contributed to this report.
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