When the “bear gas” of U.S. stocks is surging, Citigroup ticks out these high-quality stocks

U.S. stock investors can look for quality stocks as they grapple with the Federal Reserve’s rate hike cycle and a possible recession, Citigroup said.

“There’s no denying that stocks with quality attributes have so far not been immune to this year’s volatility,” equity strategist Scott Chronert wrote in a note. protected from multiple adverse factors.”

“However, these factors may limit the volatility of individual stocks relative to other stocks,” Chronert said. In addition, the stabilization of business models should provide some relief from macro and interest rate policy concerns. We observe some recent quality factor performance trends and characteristics , and combine the criteria for two Citi ‘Buy’ rated stocks, which have buying opportunities.”

The first screening criteria are “buy” rated stocks in the Russell 1000 with the following characteristics:

Low cash flow (1-year, 10-year) growth standard deviation top quartile (ie, cash flow growth is less volatile/risky);

Positive 10-year cash flow compound annual growth rate (CAGR);

The current P/E is 10% below the 5-year average (and the absolute P/E is below 50).

The stocks by industry are:

The screening criteria for the second “buy” grade stocks are:

The top quartile of low debt ratio (average equity-liability ratio, asset-liability ratio, and debt-to-equity ratio);

The current P/E is 10% below the 5-year average (and the absolute P/E is below 50).

The stocks by industry are:

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