Billionaire Leon Cooperman Says Bear Market Expected to Continue in 2023 – Here Are 2 ‘Safe Haven’ Stocks Analysts Like
Are you feeling optimistic that the new year will usher in a change in stock market dynamics and shift sentiment from bear to bull? Well, Leon Cooperman have some bad news for you.
The billionaire investor has been a full-fledged bear for a while now, and 2023 hasn’t done much to change his stance. “Anyone looking for a new bull market is looking the wrong way,” Cooperman said.
In fact, Cooperman believes there’s only a 5% chance the S&P 500 will see 2023 above the 4,400 mark (up 13% from current levels), believing the stock market is far more likely to bounce back from here .
Cooperman obviously knows a thing or two about investing in bear markets, and if we’re to follow his advice, it’s best to look for ‘safe havens’ to protect against further incoming volatility.
With this in mind, we dived in TipRank’s database and pulled out two stocks that analysts believe offer just that. Moreover, the view on Wall Street is that both are strong buys. Let’s see what makes them good shelters from the storm right now.
Ashland Inc. (ASH)
The first stock we will look at is the US chemical company Ashland. With a presence in more than 100 countries, the company offers additives and specialty ingredients and provides services to customers in a variety of 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 capitalization of $5.77 billion.
And bucking the general market trend, Ashland has managed to maintain that market cap over the past year, with the stock seeing 2022 1% in the green, a far better showing than the S&P 500’s 19% loss.
Delivering strong earnings certainly helps beat the market, and that’s something the company’s latest report – for the fourth quarter of fiscal 2022 (September quarter) – managed to pull off. Revenue rose 6.8% year-over-year to $631 million, which met Street expectations, while adj. EPS improved 20% to $1.46 – 5 cents above the consensus estimate of $1.41. Importantly, the company provided an excellent outlook, with FY23 sales expected to be in the range of $2.5 billion to $2.7 billion, compared to consensus of $2.39 billion.
Explaining the bull case, BMO analyst John McNulty explains the countless reasons to support the company.
“ASH’s defensive nature (60-65% of their revenue tied to personal care and life sciences) and its sold positions in a number of product lines should help insulate the company from the 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’s products (up-selling), they should continue to see positive pricing for the portfolio. Finally, ASH has significant balance sheet strength that gives the company significant flexibility while offering investors financial stability. With all of the above in mind, ASH should provide investors with a safe haven in 2023 as macro uncertainty continues.”
Accordingly, McNulty rates ASH shares as an Outperform (i.e. Buy), backed by a price target of $139. Investors could be sitting on gains of ~30% if McNulty’s forecast pans out as expected. (To see McNulty’s track record, click here)
Overall, it’s clear that Wall Street agrees with McNulty about the outlook for Ashland going forward. The stock’s 8 recent analyst reviews include 7 buys and 1 hold, for a strong buy consensus, indicating a bullish outlook. Shares are priced at $106.57, and their average price target of $131.25 implies a 12-month upside of 23%. (See Ashland stock forecast at TipRanks)
AmerisourceBergen Corporation (ABC)
If recent results amid 2022’s bearish trends are anything to go by, then AmerisourceBergen’s credentials are hard to beat. The US drug wholesaler outperformed the average last year, giving investors robust returns of 26%.
The company is one of the world’s largest providers of pharmaceutical services, focused on both drug manufacturers and healthcare providers, offering drug distribution and consulting services. In fact, such is the reach, about 20% of all the drugs sold and distributed in the United States are handled 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 company is experiencing strong demand, even against the backdrop of an unfavorable macro, was evident in the most recently reported statement – for the fourth fiscal quarter of 2022 (September quarter). Revenue reached $61.17 billion, up 4% year-on-year, while adj. EPS clocked in at $2.60. Both results beat Street expectations. For the 2023 outlook, the company called for revenue growth to be in the 5 to 7% range, while reiterating the F2023 adjusted EPS forecast of $11.45 at the midpoint it set at its investor day in June.
This stock has received interest from JP Morgan’s Lisa Gillwho believe that the company is well set up to handle the current market environment.
“We remain bullish on ABC given solid FY22 results and FY23 guidance outlook that provides a reasonable view of 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 offset currency and inflationary pressures within the international business , which will diminish over time … We also believe the company can be a relatively safe haven in an uncertain economic environment, as we do not expect an impact on prescription drug demand in an economic downturn.”
These comments support Gill’s Overweight (i.e. Buy) rating on ABC stock, while her $191 price target implies a one-year stock upside of ~15%. (To see Gill’s track record, click here)
Overall, ABC currently has a Strong Buy rating from analyst consensus based on 8 analyst reviews, divided 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 at TipRanks)
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Disclaimer: The opinions expressed in this article are solely 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.