Feeling optimistic that the new year will bring a change in the dynamics of the stock market and shift sentiment from bear to bull? Well, Leon Cooperman has some bad news for you.
The billionaire investor has been a total bear for a while and 2023 has done little to change his stance. “Anyone looking for a new bull market anytime soon is looking the wrong way,” Cooperman said.
In fact, Cooperman thinks there’s only a 5% chance the S&P 500 will see 2023 above the 4,400 mark (up 13% from current levels), assuming the stock market is more likely to bounce back from here.
Cooperman obviously knows a thing or two about investing in bear markets, and if we follow his advice, it’s best to look for ‘safe havens’ to protect from further future change.
With this in mind, we scoured the TipRanks database and picked two stocks that analysts believe offer that. Furthermore, the view on Wall Street is that both are Strong Buys. Let’s take a look at what makes them great shelters from the storm today.
Ashland Inc. (ash)
The first stock we will look at is the American chemical company Ashland. With a presence in 100+ countries, the company offers additives and specialty ingredients, serving clients in various consumer and industrial sectors, such as personal care, automotive, energy, food and beverage, nutraceuticals, pharmaceuticals, and architectural coatings. With a workforce of 3,900, the company has a market cap of $5.77 billion.
And against the general trend of the market, Ashland managed to preserve the market cap in the past year, with the stock seeing 2022 1% to the green, a better display than the S&P 500 loss of 19 %.
The delivery of stable income will certainly help to beat the market, and this is something that the company’s latest report – for the fourth quarter of the fiscal year 2022 (September quarter) – was able to capture . Revenue rose 6.8% year-over-year to $631 million, meeting Street expectations while adj. EPS rose 20% to clock in at $1.46 – 5 cents above the $1.41 consensus estimate. Importantly, the company provided an excellent outlook, with sales for FY23 expected to be in the range between $2.5 billion to $2.7 billion compared to the consensus of $2.39 billion.
Putting the bull-case, BMO analyst John McNulty explained several reasons to support the company.
“ASH’s defensive nature (60-65% of their revenue tied to personal care and life sciences) and sold positions in multiple product lines should help insulate the company from of macro headwinds expected in 2023,” the analyst said. “Furthermore, as ASH increases its focus on selling products to applications that find/appreciate greater value from ASH products (up-selling), they should continue to look at look for a positive price for the portfolio. Finally, ASH has significant balance sheet strength that gives the company significant flexibility while offering investors financial stability. With all that in mind, ASH should provide investors with a safe haven in 2023 as macro uncertainty continues.
Accordingly, McNulty rates ASH shares an Outperform (ie Buy), supported by a $139 price target. Investors could be sitting on gains of ~30%, if McNulty’s forecast plays out as expected. (To see McNulty’s track record, click here)
Overall, it’s clear that Wall Street agrees with McNulty’s future prospects for Ashland. The 8 new analyst reviews of the stock include 7 Buy and 1 Hold, for a Strong Buy consensus indicating a bullish outlook. Shares are priced at $106.57 and their $131.25 average price target implies a 12-month upside of 23%. (See TipRanks’ Ashland stock forecast)
AmerisourceBergen Corporation (ABC)
If recent past performance amid bearish trends in 2022 is anything to go by, then AmerisourceBergen’s credentials are hard to beat. The American drug wholesale company did better than average last year, generating for investors a solid return of 26%.
The company is one of the largest pharmaceutical service providers in the world, focused on pharmaceutical manufacturers and healthcare providers, and offers drug distribution and consulting services. In fact, this is how it is achieved, about 20% of all pharmaceuticals sold and distributed in the US are managed by the company. In addition, AmerisourceBergen has a strong international presence with more than 150 company-owned offices spread across the globe.
The fact that the business is seeing strong demand even against the backdrop of a bad macro is clearly visible in the latest reported statement – for the fourth fiscal quarter of 2022 (September quarter). Revenue reached $61.17 billion, up 4% year-over-year while adj. EPS clocked in at $2.60. Both results beat Street expectations. For the 2023 outlook, the company is calling for revenue growth to be in the 5 to 7% range as it reiterated its F2023 adjusted EPS forecast of $11.45 at the midpoint set on the investor day in June.
The stock has drawn interest from JP Morgan’s Lisa Gill, who believes the company is well positioned to deal with the current market environment.
“We remain positive on ABC given its strong FY22 results and FY23 guidance outlook that offers a reasonable outlook in a challenging environment,” explained the 5-star analyst. “Ultimately, we believe the US Healthcare Solutions business is poised for growth on the back of strong Rx and specialty volumes (including oncology and ophthalmology biosimilars), and should continue to balance FX and inflationary pressure within the International business, which will slow down over time… We also believe that the company will be a relative safe haven in an uncertain economic environment, because we do not expect to have an impact to ask for of prescription drugs in an economic downturn.
These comments support Gill’s Overweight (ie Buy) rating on ABC shares, while his $191 price target implies a one-year share appreciation of ~15%. (To see Gill’s track record, click here)
Overall, ABC currently has a Strong Buy rating from the analyst consensus, based on 8 analyst reviews, breaking into 7 Buys and 1 Hold. Shares are priced at $165.71 and have an average price target of $181.63, suggesting a one-year potential upside of ~10%. (See ABC stock forecast on TipRanks)
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Disclaimer: The opinions expressed in this article are those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
