Buying stocks with a history of outperforming in previous sell-offs could be a good strategy to weather volatility, according to Bank of America. President Donald Trump’ s new trade policies have roiled markets in recent weeks, with investors abandoning riskier assets and scrambling to safe havens. Indeed, the S & P 500 is down about 7% over the past month, and the index briefly slipped into correction territory last week. Recent data has also suggested a softening in consumer sentiment , and the Federal Reserve this week said it sees higher inflation and slowing economic growth. Against this highly uncertain economic backdrop, analysts at Bank of America screened for the companies that have a history of performing well during pullbacks. “With increasing uncertainty over the macro, stocks with a history of weathering prior downturns with low crowding risk and low earnings volatility may make sense,” Savita Subramanian, equity and quant strategist, wrote in a Thursday report. To be included in the table below, stocks had to meet the following criteria: Be a member of the Russell 1000 Outperformed in at least 80% of prior market pullbacks of at least 10% since 1983 Have a high-quality rating (B+ or better S & P quality rank) Be underweight by long-only active fund managers (relative weight in holdings < 1.0) The “hit rate” column describes the percentage of times the stock has outperformed in pullbacks of at least 10% since 1983. Two names on the list were household product names Church & Dwight and Clorox , which respectively have hit rates of 90% and 81%. Both stocks are also dividend payers, with Church & Dwight having a dividend yield of 1.1%, while Clorox has a dividend yield of 3.4%. Shares of Church & Dwight have added 4% over the past 12 months. Clorox stock is down more than 3% over the past year. Bank of America analyst Bryan Spillane recently highlighted the names as two that could weather risks associated with Trump’s trade policies. “We see companies with more domestic exposure as better positioned (CHD, CLX) vs. multi-national peers, which face greater pressure and volatility from a changing tariff and FX environment,” he wrote. Spillane’s $112 price objective is nearly 4% above where shares of Church & Dwight closed on Wednesday afternoon. His $172 price target for Clorox implies a potential upside of 18%. Pharmaceutical giant Johnson & Johnson has risen 4% over the past 12 months. The stock has outperformed in previous corrections 88% of the time, Bank of America found. Johnson & Johnson has a dividend yield of 3%. Earlier this month, the bank’s analyst Tim Anderson raised his price target on the stock to $171 from $159. His updated forecast is nearly 5% above where shares closed on Wednesday. “Upside risks to our PO are better-than-expected launch of new products, pipeline success greater than we model, quick resolution of talc litigation, and constructive M & A that adds to topline growth,” he wrote. Other names on the list included PepsiCo , with a hit rate of 88%, and NextEra Energy , with a hit rate of 91%.
