5 Stocks Recommended by Wall Street Analysts During Inflation

Hopes of inflation inflecting to the downside were shattered when the most recent CPI data was released on November 10th, indicating that inflation had reached a 30 year high at a rate of over 6%. With inflation trending up, the risk tolerance of investors is understandably trending down. Many investors could be forgiven for taking a more risk-off approach with their portfolios and seeking to rotate into stocks that help to protect their wealth from the effects of inflation.

This post will examine 5 defensive stocks that investors could use to help protect their portfolios. Let’s jump in!

Pioneer Natural (PXD) 

Pioneer Natural Resources is a US-based company headquartered in Irving, Texas. The company is engaged in the business of hydrocarbon exploration with its main operations in Cline Shale. 

PXD represents an excellent opportunity for those investors looking to hedge their portfolios against the risk of inflation. Its stock has seen 12.96% growth over the past 6 months, and it is not expected to slow down. At $181 a share, there is an estimated return of approximately 22.40% based on the average price targets of 19 Wall Street analysts who recently offered their 12-month price targets. 

Overall, the rewards certainly outweigh the risks when it comes to PXD, which is why it is considered a “strong buy” for those investors looking to rotate their portfolios into defensive positions. 

Goldman Sachs Group (GS) 

As one of the world’s premier financial institutions, Goldman Sachs needs little introduction. Their comprehensive services list includes investment management, securities, asset management, prime brokerage, and securities underwriting. 

A well-entrenched stock with a solid financial history, GS is a welcomed addition to any defensive portfolio. The past 6 months have seen a respectable 9.96% growth, and this growth will continue, according to experts. According to 13 Wall Street analysts who have offered 12-month price targets for GS, the average price target of $464.15 represents a further 16.29% increase on your investment today. 

Goldman Sachs’s performance this year has been spectacular, and its stock price has certainly reflected this. Over the past year, GS has seen 82.52% growth in its stock price, and if the analysts are right, there is more to come. For these reasons, Goldman Sachs is considered a “strong buy” for investors concerned by the prospect of inflation. 

Johnson & Johnson (JNJ) 

A dividend investor favorite, Johnson and Johnson is a commonly held position by defensive investors everywhere, and it is easy to see why. With a healthy dividend yield of 2.6% and a wide range of products that are in constant need regardless of the economic environment they find themselves in, JNJ is an easy selection for most defensive investors. 

Based on 6 Wall Street analysts offering their 12-month price targets for Johnson & Johnson over the last 3 months, the average price target is $196. This represents a substantial 19.32% return for investors who open a position today. 

Paypal Holdings (PYPL) 

A household name, this FinTech company needs no introduction. PayPal has certainly had its fair sure of bad news over the last 6 months, from the Pinterest acquisition fiasco to a series of disappointing earnings calls. These temporary setbacks have presented investors with a meaningful opportunity to open a position with this well-established FinTech company at a very attractive entry point. 

According to 26 Wall Street analysts, the 12-month average price target for Paypal Holdings is $283.83. The stock currently sits in the low 200’s having fallen from $308. The current estimate per share represents a potential return of 38.70%.

A drop this substantial in such a large-cap company almost makes PayPal a value play for defensive investors providing it with the coveted “strong buy” recommendation.

Microsoft (MSFT) 

Founded in 1975, Microsoft has grown to secure itself a market capitalization of 2.5 trillion USD. As one of the world’s largest companies, Microsoft represents the 5th and final stock on our list. 

The past 6 months have been positive ones for investors in this leading software company, with a return of 36.87%. Unfortunately, as with most mega-cap stocks, the upside here is not as significant as with other names on this list. 

Microsoft currently sits at $335.59 per share and according to 23 Wall Street analysts, the average price target over the next 12 months is $364.36 which represents a further 10.15% return for investors who open a position today. 

Whilst the returns may not be as lucrative with Microsoft, the risks are also negligible. Investors willing to buy and hold Microsoft over the long-term are highly unlikely to lose their principal investment, and with the additional benefit of a 0.74% dividend yield, Microsoft has received a “strong buy” recommendation. 

Conclusion

President Biden has publicly stated his belief in the multiple Nobel Prize-winning economists who suggest that his administration’s infrastructure packages will help to ease longer-term inflationary pressures. Whether inflation is transitory or not, many investors with a low risk tolerance choose to secure their portfolios with a range of defensive positions that protect not just against inflation but other economic risks. If you are looking to alternate into more defensive positions, then the above-mentioned stocks are fantastic opportunities for continued secure and stable growth.

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