As summer travel remains solid and consumer spending appears robust, plenty of analysts now believe a recession will not materialize. However, that is not the view of Raymond James’ CIO, Larry Adam. Adam is of the mind that a recession is all but inevitable and will kick off by this year’s fourth quarter.
That said, the good news is that it will be a mild recession, one where the U.S. economy will shrink in a far less acute manner than during other recessions (0.6% vs. the average 2.5%), won’t last as long (6 months vs. the usual 10 months), and during which only 500,000 jobs will be lost compared to the 3.5 million jobs typically shed during a recession. “In fact,” Adam goes on to say, “this will likely be the second mildest recession we’ve seen in the post-World War II era.”
As for the markets, Adam sees S&P 500 earnings falling by just 1%, far below the typical 25% drop observed in a normal recession. And that is why he also does not foresee a big decline in equity prices. “The bottom line is that while we do expect a mild recession to unfold, that does not deter us from our more favorable outlook for both the equity and fixed income market,” Adam summed up.
For investors, of course, the main question remains: which equities are best positioned to thrive against this backdrop? Raymond James analysts have an idea about that and have tagged two names as ‘Strong Buys’ right now. And they are not alone, according to TipRanks’ database, both are also rated as ‘Strong Buy’s by the analyst consensus. Let’s see why they are drawing plaudits across the board.
Coastal Financial Corp (CCB)
The first Raymond James-endorsed name takes us to the banking sector, where we find Coastal Financial, a bank holding company headquartered in Everett, Washington.
The company offers conventional lending and deposit services to both businesses and individuals through its subsidiary, Coastal Community Bank. Additionally, Coastal Financial provides Banking-as-a-Service (BaaS) to digital financial services companies and broker dealers through its CCBX segment….
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