As fears of a Wall Street recession grew, CNBC Pro found stocks that were cheap even in an economic downturn. The main averages point to a losing week on Friday. Investors are worried that this week’s announcement of the Federal Reserve’s most aggressive interest rate hike in 1994 could drive the economy into recession. Stocks may also continue to rise if earnings forecasts fall. This week, Deutsche Bank analysts said earnings forecasts were “too high” given their underlying assumption of a moderate recession by the end of 2023. They cited mega-ceiling growth and technology stocks as particularly vulnerable to rising expectations. However, some stocks may provide investors with a “safety margin” in the long run, even in a recession. CNBC Pro reduced the 12-month earnings forecast of each company in the S&P 500 by 30% to calculate the price-earnings ratio for each stock in a recession. We then compared the new recession-adjusted P / E with the average P / E of the last five years. Of course, these are long-term investment opportunities that you can take advantage of in the current sale, as they must reflect the real value of the securities over time. Here are the 20 cheapest stocks in the S&P 500 in a recession scenario: Many energy stocks are on the list. Occidental Petroleum shares are expected to sell at 8.8 times earnings after adjusting for the recession, meaning they will be trading at 65.7% off their 5-year average P / E of 25.8. Shares of Valero Energy should trade at a P / E of 12.2 even on a decline, with a 54% discount over its 5-year average future earnings. Diamondback Energy shares are expected to trade 7.9 times in recession or 33% off. Alaska Air can be cheap even after ratings drop. Even after lowering recession earnings forecasts, the airline is expected to trade 10.6 times its profit or almost 63% off. United Airlines is also on the list. The airline’s P / E ratio is expected to be 13.7 in recession or at a 45% discount. Some home builders also look like buying options in a recessionary scenario. DR Horton has a recession P / E of 5.2, which would be 46% off the average forward earnings for the last five years. Lennar has a recession P / E of 5.6, 37% discount. PulteGroup has a recession P / E of 4.7, or nearly 43% off. Other stocks on this list include Mosaic, Moderna, EOG Resources, Devon Energy, Pioneer Natural Resources, Chevron, Exxon Mobil, PVH, Coterra Energy, Weyerhaeuser, Global Payments and Nucor.
These stocks can be cheap purchases in the long run, even if hit by a recession