In this article, we discuss 5 best stocks to buy before the next recession starts. If you want to see more stocks in this selection, click 10 Best Stocks to Buy Before Recession Begins.
5. Bunge Limited (NYSE:BG)
Number of Hedge Fund Holders: 48
Bunge Limited (NYSE:BG) is a Missouri-based food company that operates through Agribusiness, Refined and Specialty Oils, Milling, and Sugar and Bioenergy segments. Bunge Limited (NYSE:BG) on August 11 declared a $0.625 per share quarterly dividend, in line with previous. The dividend is payable on December 2, to shareholders of record on November 18. As of September 22, the company delivers a dividend yield of 2.81%. Bunge Limited (NYSE:BG) is one of the best stocks to buy before the next recession starts, as demand for food ingredients never runs low even amid economic downturns.
On August 12, Wolfe Research analyst Sam Margolin initiated coverage of Bunge Limited (NYSE:BG) with an Outperform rating and a $127 price target. The analyst thinks that the company’s growth guidance has some upside amid a robust commodity price backdrop. The analyst also highlighted Bunge Limited (NYSE:BG)’s expected FY23 free cash flow yield being “materially” above the average during the 2015-2019 period.
According to Insider Monkey’s Q2 data, 48 hedge funds were long Bunge Limited (NYSE:BG), compared to 55 funds in the earlier quarter. Israel Englander’s Millennium Management, with roughly 2 million shares worth $176.8 million, is the leading position holder in the company.
Here is what Old West Investment Management had to say about Bunge Limited (NYSE:BG) in its Q1 2022 investor letter:
“Bunge (pronounced BUN-GEE) Ltd (NYSE:BG) is one of the biggest agribusinesses and food companies in the world. There are four worldwide companies that dominate the sector, the others being Archer-Daniels-Midland Cargill, and Dreyfuss. One of our favorite ways to screen for new ideas is following insider buying. When I saw the Form 4 filed by new Bunge CEO Greg Heckman, his purchase of $9 million of BG stock intrigued me. My initial thought was the company gave him the stock as a signing bonus. I contacted BG Investor Relations and asked whether it was a signing bonus or did Heckman actually write a check for $9 million. IR assured me it was his own hard-earned money that he invested in the company he was about to run.
Heckman was a long time executive at Conagra Foods who obviously sensed opportunity at BG. One of his first moves as CEO was to move the company’s HQ from New York to St. Louis, right in the middle of America’s breadbasket. BG had been plagued for years with poor decisions by underperforming management. Heckman’s decision to move to St. Louis was indicative of a no-nonsense style and he would commence cutting expenses and selling non-core assets…” (Click here to see the full text)
4. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 56
Newmont Corporation (NYSE:NEM) is a Colorado-based company engaged in the production and exploration of gold. The company also explores for other precious metals, such as copper, silver, zinc, and lead. Gold acts as a safe haven in times of economic distress, which makes Newmont Corporation (NYSE:NEM) one of the best stocks to load up on before the next recession starts.
On September 12, Goldman Sachs analyst Emily Chieng assumed coverage of Newmont Corporation (NYSE:NEM) with a Buy rating and a $53 price target. The stock’s latest underperformance has offered an attractive entry point for a “low risk gold producer delivering volume growth,” the analyst told investors in a research note. Similarly, on September 6, UBS analyst Cleve Rueckert upgraded Newmont Corporation (NYSE:NEM) to Buy from Neutral with a price target of $50, down from $78, citing a deep value opportunity.
According to Insider Monkey’s data, 56 hedge funds were long Newmont Corporation (NYSE:NEM) at the end of June 2022, compared to 53 funds in the prior quarter. Rajiv Jain’s GQG Partners is the biggest position holder in the company, with approximately 35 million shares worth over $2 billion.
Here is what First Eagle Investments Global Fund has to say about Newmont Corporation (NYSE:NEM) in its Q2 2022 investor letter:
“Shares of Colorado-based Newmont, the largest gold miner in the world, experienced weakness in the quarter as falling gold bullion prices and cost inflation hurt miners in general. More idiosyncratically, the company reported slightly disappointing earnings and production results for its most recent quarter due to pandemic-related disruptions, ongoing supply-chain constraints, and labor shortages.
It also warned that operating costs for 2022 were likely to come in at the upper end of previous guidance. We remain constructive on the stock, which offers steady production anchored in good jurisdictions, a good pipeline of organic projects, a strong balance sheet, and proven management.”
3. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 64
Costco Wholesale Corporation (NASDAQ:COST), the American operator of membership warehouses, is one of the best defensive plays to navigate the market before the next recession starts. On August 31, Costco Wholesale Corporation (NASDAQ:COST) announced comparable sales growth of 10.1% in August and net sales of $17.55 billion, up 11.4% year-over-year.
On September 12, Deutsche Bank analyst Krisztina Katai raised the price target on Costco Wholesale Corporation (NASDAQ:COST) to $581 from $579 and kept a Buy rating on the shares.
According to Insider Monkey’s data, Costco Wholesale Corporation (NASDAQ:COST) was part of 64 hedge fund portfolios at the end of the second quarter of 2022, compared to 61 funds in the earlier quarter. Ken Fisher’s Fisher Asset Management held the largest stake in the company, comprising 4.3 million shares valued at more than $2 billion.
In its Q2 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Costco Wholesale Corporation (NASDAQ:COST) was one of them. Here is what the fund said:
“Portfolio gains were led by a diverse group of contributors. Also in consumer discretionary, Costco Wholesale Corporation (NASDAQ:COST), which operates a chain of membership-only big-box retail stores, continues to impress as it takes to share and becomes more relevant for the consumer even as the world opens up.”
2. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Another stock to buy before the next recession begins is Walmart Inc. (NYSE:WMT), as consumers don’t largely pull back spending on grocery and consumables, home care products, baby care items, and pet supplies. On September 7, the company announced that it plans to raise $5 billion through bond offerings, and bonds will be due between 2025 and 2052, with a coupon rate ranging from 3.9%-4.5%.
On September 14, KeyBanc analyst Bradley Thomas initiated coverage of Walmart Inc. (NYSE:WMT) with an Overweight rating and a $155 price target. The analyst said his rating is “underpinned by an outlook for defensive growth, market share gains, and margin recovery to normal levels”. Walmart Inc. (NYSE:WMT) has had the best competitive positioning in the last decade, since the pandemic led to e-commerce “becoming significantly more important”, the analyst contended.
Among the hedge funds tracked by Insider Monkey, Walmart Inc. (NYSE:WMT) was part of 67 public stock portfolios at the end of June 2022, up from 60 in the preceding quarter. Rajiv Jain’s GQG Partners is the leading position holder in the company, with 9.8 million shares worth $1.2 billion.
1. ConocoPhillips (NYSE:COP)
Number of Hedge Fund Holders: 71
ConocoPhillips (NYSE:COP) is a Texas-based company that produces, transports, and markets crude oil, bitumen, natural gas, liquefied natural gas, and natural gas liquids. The company is expanding LNG operations with significant projects in the United States and Qatar. ConocoPhillips (NYSE:COP) is one of the best stocks to buy before the next recession begins, as demand for energy is projected to remain elevated throughout the winter and beyond.
On September 12, investment advisory Piper Sandler raised the price target on ConocoPhillips (NYSE:COP) to $134 from $123 and kept an Overweight rating on the shares, citing its constructive stance on the integrated oils group. Analyst Ryan Todd issued the ratings update.
Among the hedge funds tracked by Insider Monkey, Ric Dillon’s Diamond Hill Capital is one of the leading stakeholders of ConocoPhillips (NYSE:COP), with roughly 6.6 million shares worth about $592 million. Overall, 71 hedge funds were bullish on the stock at the end of June 2022, up from 67 funds in the preceding quarter.
Here is what ClearBridge Investments Large Cap Value Strategy has to say about ConocoPhillips (NYSE:COP) in its Q1 2022 investor letter:
“The energy sector, which led a strong market in 2021, generated even more dramatic relative performance in the quarter, advancing 39% and leading the benchmark Russell 1000 Value Index. Years of restrained investment in the energy sector, combined with a strong post-pandemic recovery, contributed to the higher commodity prices. The upward pressure escalated with the Russian invasion of Ukraine. Our energy holdings ConocoPhillips (NYSE:COP) benefited from higher commodity prices and was among the top contributors to first-quarter performance.”
You can also take a look at 12 Best New Tech Stocks To Buy and 12 Best IPO Stocks To Buy.
