Given the recent surge of inflation-related data points that are showing up across Wall Street, the question of whether the economy slips into a recession is a “not if, but when“ proposition. With prices up a stunning 8.5% year over year, those increases are starting to find their way through to major companies, and it is looking grim.
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Target stock was eviscerated Wednesday, dropping a stunning 25% after reporting horrific results for the quarter, and the biggest culprit is no surprise. Rising costs chopped gross margins at the big-box giant by 4.3% year over year, which reflected higher markdown rates and increased freight and supply chain costs.

While some have dismissed the recession fears, the reality is that we could be in one now. The definition of a recession is two consecutive quarters of negative gross domestic product. First-quarter GDP decreased at an annual rate of 1.4%. Should that happen in the second quarter, that would technically place the economy in recession.

A new Goldman Sachs research report cites 14 companies that have indicated they can weather a potential recession. We screened those companies looking for those with a Buy rating at Goldman Sachs and those that also pay dependable dividends. We found six that worried investors should consider now. It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.

Bank of America

This company posted very solid first-quarter results and Warren Buffett owns a stunning 1.1 billion shares. Bank of America Corp. (NYSE: BAC) is a ubiquitous presence in the United States, providing various banking and financial products and services for individual consumers, small and middle-market businesses, institutional investors, corporations and governments in the United States and internationally. It operates 5,100 banking centers, 16,300 ATMs, call centers and online and mobile banking platforms.

Bank of America has expanded into several new U.S. markets, with scale across the country positioning it ideally to benefit from accelerating loan growth over the next two years. Moreover, unlike smaller peers, scale allows the bank to increase investment substantially over the next few years without notably jeopardizing returns, driving further market share gains.

Shareholders receive a 2.41% dividend. Bank of America stock is on the Goldman Sachs Conviction List of top stock ideas. The firm’s $47 price objective is less than the $51.40 consensus target, but the shares closed on Wednesday at $34.88.

This giant insurer is a solid bet for worried investors now, and it also posted solid first-quarter earnings. Chubb Ltd. (NYSE: CB) provides insurance and reinsurance products worldwide. The company operates through the following segments.
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Its North America Commercial P&C Insurance segment offers commercial property, casualty, workers’ compensation, package policies, risk management, financial lines, marine, construction, environmental, medical, cyber risk, surety and excess casualty, as well as group accident and health insurance to large, middle market and small commercial businesses.

The North America Personal P&C Insurance segment provides affluent and high net worth individuals and families with homeowners, automobile and collector cars, valuable articles, personal and excess liability, travel insurance and recreational marine insurance and services.

The North America Agricultural Insurance segment offers multiple peril crop and crop-hail insurance, as well as coverage for farm and ranch property and commercial agriculture products.

The Overseas General Insurance segment provides coverage for traditional commercial property and casualty; specialty categories, such as financial lines, marine, energy, aviation, political risk and construction risk; and group accident and health and traditional and specialty personal lines for corporations, middle markets and small customers through retail brokers, agents and other channels.

The Global Reinsurance segment offers traditional and specialty reinsurance under the Chubb Tempest Re brand to property and casualty companies.

Its Life Insurance segment provides protection and savings products comprising whole life, endowment plans, individual term life, group term life, medical and health, personal accident, credit life, universal life and unit linked contracts.

Investors in Chubb stock receive a 1.54% dividend. Goldman Sachs has a $253 target price, and the consensus target is $245. Wednesday’s closing print was $207.31 a share.

Citizens Financial

This top financial pick across Wall Street and is also on the Goldman Sachs Conviction List. Citizens Financial Group Inc. (NYSE: CFG) operates approximately 2,700 ATMs and 1,000 branches in 11 states in the New England, Mid-Atlantic and Midwest regions, as well as through online, telephone and mobile banking services, and it maintains approximately 130 retail and commercial non-branch offices.
Citizens Financial operates in two segments. The Consumer Banking segment offers traditional banking products and services, including checking and savings accounts, home and education loans, credit cards, business loans, mortgage and home equity lending and unsecured product finance and personal loans, as well as wealth management and investment services to retail customers and small businesses. This segment also provides indirect auto finance for new and used vehicles through auto dealerships.
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The Commercial Banking segment offers various financial products and solutions, such as loans and leasing, trade finance, deposit and treasury management, cash management, and foreign exchange and interest rate risk management solutions. It also provides loan syndications, corporate finance, merger and acquisition, and debt and equity capital markets capabilities.

Shareholders receive a 4.11% dividend. The Goldman Sachs target price is $60, in line with the $60.53 consensus target for Citizens Financial stock. The shares closed almost 4% lower on Wednesday at $38.00.

Constellation Brands

If any company has products that stay in style, it is this one, and it has only 7% foreign sales. Constellation Brands Inc. (NYSE: STZ) is a leading global producer and marketer of beverage alcohol. Its wide-ranging portfolio spans wine, spirits and imported beer.

Constellation Brands is one the world’s largest wine companies overall and is the largest global premium wine company. Key brands include Robert Mondavi, Clos du Bois, Blackstone, Arbor Mist, Black Velvet and SVEDKA vodka. It also owns 100% of the rights to brew, market and sell Modelo’s Mexican beers in the United States.

Constellation Brands made a gigantic $3.8 billion investment in cannabis company Canopy Growth in 2018 to increase its holdings in the company. The record investment reflects a world in which marijuana has become ubiquitous as its counterculture stigma fades and more states legalize use.

The dividend yield is 1.35%. The $275 Goldman Sachs price target compares with the $273.48 consensus target. Wednesday’s final trade for Constellation Brands stock was reported at $237.05.

Honeywell

This top industrial stock could be poised for a solid balance of 2022 and beyond, if global growth picks up again. Honeywell International Inc. (NYSE: HON) is a New-Jersey-based diversified, global technology and manufacturing company.
The company is a premier supplier of avionics, power and control systems for the aerospace industry. Honeywell’s operations are organized under four business groups: Aerospace, Home & Building Technologies, Safety & Productivity Solutions, and Performance Materials & Technologies.

Shareholders receive a 2.02% yield. The price target on Honeywell International stock at Goldman Sachs is $220. The consensus target is $225, and Wednesday’s close was at $193.87.
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PepsiCo

This top consumer staples provider soon will be supplying the goods for summer picnics, and the stock also resides on the Conviction List at Goldman Sachs. PepsiCo Inc. (NYSE: PEP) operates as a food and beverage company worldwide. Its Frito-Lay North America segment offers Lay’s and Ruffles potato chips; Doritos, Tostitos and Santitas tortilla chips; and Cheetos cheese-flavored snacks, branded dips and Fritos corn chips.

The Quaker Foods North America segment provides Quaker oatmeal, grits, rice cakes, natural granola and oat squares, as well as the recently name-changed Aunt Jemima mixes and syrups, and Quaker Chewy granola bars, Cap’n Crunch cereal, Life cereal and Rice-A-Roni side dishes.

PepsiCo’s North America Beverages segment offers beverage concentrates, fountain syrups and finished goods under the Pepsi, Gatorade, Mountain Dew, Diet Pepsi, Aquafina, Tropicana Pure Premium, Sierra Mist and Mug brands, as well as ready-to-drink tea and coffee, and juices.

Shareholders receive a 2.81% dividend. Goldman Sachs has set its price target at $187. The consensus target is $183.44. PepsiCo stock closed down 6% on Wednesday at $163.65.

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These six top companies are all leaders in their specific silos, and they are Goldman Sachs picks that pay dependable and seemingly secure dividends. While a recession could bring some damage, it certainly seems these top picks are all well positioned now for a downturn in the economy, which as we noted, we could be in already.

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