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.
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.
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