How to cope with the uncertainties arising from inflation, the Ukraine war, possible stagflation or even recession will have taxed many investors’ minds recently.
Credit Suisse asked its analysts just that question and the stocks that would fare best on the criteria of lower direct exposure to Eastern Europe and eurozone cyclicality, low exposure to rising input and freight costs and strong pricing power.
Fifteen stocks pass that test says the Swiss bank with in the UK Lloyds Banking Group PLC (LSE:LLOY), National Grid PLC (LSE:NG.) and Reckitt Benckiser Group PLC (LSE:RKT, ETR:3RB) the stand-outs.
Notably, Credit Suisse says all three have good pricing power and will be able to pass through any input costs.
Spirits group Diageo PLC (LSE:DGE) also features for its low exposure to Eastern Europe and high presence in the US, with Smiths Group (LSE:SMIN) also doing well on the US exposure ticker but also for its ability to pass on costs and a strong balance sheet.
Ireland -based but UK-listed building materials group CRH PLC (LSE:CRH) is another lower Eastern Europe/high US exposure winner.
Among the Europeans, Credit Suisse likes BMW, Cellnex Telecom, Beiersdorf, DSM, Eurofins, KPN, Sanofi, Siemens Healthineers and Wolters Kluwer.
Europe might be a trickier call, however, as economists at the broker have reduced their growth forecast though both the eurozone and UK are expected to escape without a recession in 2022.
The eurozone is now expected to grow at 2.8% in 2022 and the UK to grow at 3.6%
"As was the case in H2 21, the ability of companies to pass on rising input costs to their customers will once again be tested," it said.
"It remains to be seen how much firepower companies will have in 2022, especially given shrinking disposable household income."