Wall Street ended an ugly quarter on Friday, with the S&P 500 posting its third straight quarterly decline for the first time since 2009. As a new period begins, RBC Capital Markets named a slew of stocks it believes that are ready to withstand the current macroclimate. In the two trading days since the third quarter ended, stocks have rallied slightly, but it’s been a tough year for investors. The S&P 500 remains up around 21%, even as it heads for its best 2-day gain since 2020. And last quarter’s issues are still nearby. Inflation remains elevated near historic highs and the war in Ukraine continues. The Federal Reserve has already raised rates a total of 3 percentage points this year. But with inflation lingering, he has signaled that at least one more increase of 0.75 percentage points could occur before the year is out, despite recession fears and calls for a slowdown. RBC expects choppy waters ahead, but expects its 30 high-conviction names to offer strong upside potential for investors during these murky times. Here’s a selection of some of those stocks: Conocophillips shares have soared about 59% since the start of 2022. Sanctions against Russia following its invasion of Ukraine have driven record prices for oil and gas this year, which in turn have supported stocks. With a price target of $130 per share, the bank believes the stock could rise another 18% from Monday’s close. Analyst Scott Hanold indicated that Conocophillips is well-positioned to outperform its large-cap E&P peers because of its low break-even point. CrowdStrike shares are down more than 14% this year. RBC attributed some of the decline to investors moving away from growth stocks during the Fed’s tightening cycle. Shares could rise 39% from Monday’s close given RBC’s $236 price target. “We see CrowdStrike as a prime floor and expansion model that benefits from SaaS delivery and the ability to quickly add more modules without the need for additional configuration or consulting,” analyst Matthew Hedberg wrote. “The long-term strength of the install base should lead to strong net expansion rates as the company cross-sells additional seats (endpoints) and modules.” Palo Alto Networks’ tech stock is set for a potential upside of 37% from Monday’s close, according to RBC’s target. Shares of the cybersecurity company have held up relatively well compared to the broader S&P 500, with shares down roughly 6%. Hedberg suspects that the growing need for complex security systems will provide a headwind for the stock going forward, positioning Palo Alto Networks as a market leader. On the consumer side, RBC added Restaurant Brands International, owner of Burger King and Popeyes, to its list of top picks for the quarter. Of course, a slowdown in consumer spending patterns could threaten restaurant visits. However, strong unit and revenue growth should support the stock’s valuation, and RBC’s $70 price target implies 29% growth. “QSR is our main idea in the high-franchise restaurant group, with our positive thesis supported by the acceleration of purchasing trends, the potential to improve unit development, to the advantage of the new strategy of Burger King and a compelling valuation, in our view,” the bank said. he wrote. Investors have found some safety this year in defensive sectors like health care. That has lifted UnitedHealth shares by more than 3% since January. Operating across broad sectors of the US healthcare industry, RBC expects the company to offer investors an attractive long-term growth trajectory. Shares of fertilizer producer Nutrien and utility company PG & E also made the list.
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