Risk-Off, Defense On: One Credit Suisse Theme Of 2016
Credit Suisse in a note Friday morning highlighted their themes and stock picks for 2016. Observing that the first two weeks have been volatile to begin the year, they gave thoughts on both Risk-On and Risk-Off markets.
In a Risk-Off market, Credit Suisse prefers defense names, in spite of higher relative valuations. One of these reasons is that they are buffered from global and currency exposure, which makes the sector easier to predict. For the first time in years, Credit Suisse believes the sector will see organic growth. Names in the sector they like include:
- L-3 Communications Holdings, Inc (NYSE: LLL) - Outperform
- Raytheon Company (NYSE: RTN) - Outperform
- General Dynamics Corporation (NYSE: GD) - Outperform
- Huntington Ingalls Industries (NYSE: HII) - Upgrade from Underperform to Neutral
- Lockheed Martin Corporation (NYSE: LMT) - Neutral
- Northrop Grumman Corporation (NYSE: NOC) - Neutral
Look for strength in these defensive names throughout the morning, given the volatility and initial selling off the open in the markets throughout the first two weeks of the year.