SOMETIMES THERE’S A CLEAR economic narrative that can help steer investors through the stock-picking process. In 2021 the guiding story was the stimulus-infused post-COVID rebound. In 2022 it was an inflationary hangover that brought back memories of the 1980s.
As for 2023, well, let’s just say it has stumped the storytellers. A year ago there was near consensus that the Federal Reserve’s inflation-fighting interest rate hikes would spark a recession in the U.S., but it didn’t turn out that way—or at least it hasn’t yet.
After that head fake, Wall Street’s top minds are unusually divided about what’s coming for the economy, and by extension the stock market. The uncertain impact of higher-for-longer interest rates, the AI boom, and rising geopolitical tensions has led to some wildly divergent outlooks among forecasters—from Deutsche Bank’s prediction of a major recession to Goldman Sachs’ view that an economic reacceleration lies ahead, driven by a still-strong job market.
It’s the kind of environment where stock investors often benefit from playing defense and offense simultaneously. On one hand, investors should look to hold companies that have strong balance sheets, steady cash flows, low debt levels, and the ability to maintain pricing power—the defensive qualities that help companies do well when inflation or high interest rates exert a drag on the broader economy. At the same time, they shouldn’t ignore firms that are aligned with long-term trends that could generate outsize growth in the future. (And yes, the adoption of AI is one of those trends.)
With this backdrop in mind, asked seven of Wall Street’s most well-respected investors and analysts for their top stock picks for 2024. The diverse mix of companies they mentioned range from sturdy, predictable consumer-staples plays to bets on a new technological revolution. In a time of uncertainty, these picks should provide a mix of
