Macro uncertainty and the U.S.-Iran conflict continue to weigh on investor sentiment. Also, oil prices remain elevated, as tensions in the Middle East continue to disrupt supply. Fears of stagflation – a period characterized by sluggish economic growth and high inflation – have risen. In this article, we will look at stocks that can be safer bets during challenging economic periods, such as stagflation, according to Wall Street analysts.
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Walmart (NASDAQ:WMT) Stock
Big-box retailer Walmart operates more than 10,900 stores and several e-commerce websites in 19 countries. The company is viewed as a defensive play during tough economic backdrops, as it sells essential, low-cost goods to budget-conscious consumers and is less impacted by curbs in consumer spending.
On April 12, Guggenheim analyst John Heinbockel reiterated a Buy rating on Walmart stock and raised the price target to $137 from $120. The top-rated analyst believes that Walmart is well-positioned for the “macro-related schizophrenia that has seen the market ping-pong between risk-off and risk-on preferences over the past year,” supported by its massive scale, mix, value perception, and operational intensity.
With 28 Buys and two Holds, Wall Street has a Strong Buy consensus rating on Walmart stock. The average WMT stock price target of $138.85 indicates 11% upside potential. WMT stock has risen 12% year-to-date.
Chevron (NYSE:CVX) Stock
The ongoing U.S.-Iran war has disrupted energy supply, driving oil prices higher. Elevated oil prices bode well for energy giants like Chevron. Notably, CVX stock has risen 23% year-to-date.
Last week, JPMorgan analyst Arun Jayaram reiterated a Buy rating on Chevron stock and raised his price target to $216 from $181. The 5-star analyst expects CVX’s Q1 earnings to show that key upstream and downstream profit drivers are back on track, providing a strong base for earnings growth over the balance of the year as oil prices and refining margins remain strong. Jayaram added that Chevron is expected to experience relatively less disruption from the ongoing war than its peers, given its limited exposure to the Middle East.
Currently, Wall Street has a Strong Buy consensus rating on Chevron stock based on 16 Buys and five Holds. The average CVX stock price target of $210.95 indicates about 13% upside potential. CVX offers a dividend yield of about 4%.
Costco Wholesale (NASDAQ:COST) Stock
Membership-only warehouse chain Costco Wholesale operates 928 warehouses, including 637 in the United States. The company’s value deals and a loyal member base help it deliver resilient performance and stable cash flows even during challenging economic times.
Recently, Telsey Advisory analyst Joe Feldman increased his price target for Costco stock to $1,135 from $1,125 and reiterated a Buy rating. The 5-star analyst noted Costco’s strong execution in an uncertain operating environment. Consequently, he expects the company to remain a profitable share gainer.
Currently, Wall Street has a Moderate Buy consensus rating on Costco stock based on 16 Buys, six Holds, and one Sell recommendation. The average COST stock price target of $1,097.28 indicates 12.6% upside potential. COST stock has risen 13% year-to-date.
