Analysts say companies with pricing power are a safer bet than tech, given that inflation is expected to stay high and the uncertainty around a Fed 'pivot.'
Forget growth stocks like tech. Analysts are recommending that investors go for companies with lots of cash. The market rallied in January — including the tech-heavy Nasdaq Composite, which rose nearly 10.7% last month for its best monthly performance since July. But analysts say companies with pricing power are a safer bet than tech, given that inflation is expected to stay high this year and the uncertainty around when the U.S. Federal Reserve will pivot to lower interest rates.
It also indicates how quickly a company can access cash in the event of an emergency or opportunity. Stock picks O'Hara said energy, health care and materials are better bets. His top picks are U.S. biotech company Moderna and oil and gas giant Chevron . He said his firm has been bullish on energy, thanks to high free cash flow yield in the sector. "It's not 100% the price of oil, it's in part the reduction in [capital expenditure]," he said.
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