2 ASX 200 shares to buy even as the world slips into recession
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While there are many different views on what will happen to S&P/ASX 200 Index (ASX: XJO) shares in 2023, most experts agree on one thing – the global economy will have a rough year.
Interest rates rose rapidly across the developed world last year, and it’s starting to bite consumers and businesses. The full impact will be felt in 2023, with some countries even plunged into recession.
During such times it is not a bad idea to look for ASX stocks to buy that represent businesses that have resilient earnings. Some companies produce goods or services that people simply cannot do without, even in difficult economic times.
Here are two stocks in exactly this position that were rated as buys this week:
‘A bright outlook’
Endeavor Group Ltd (ASX: EDV) is both an alcohol retailer and an operator of hotels and bars.
Tony Paterno, senior investment adviser at Ord Minnett, reckons it’s a stock worth buying right now.
“Endeavor operates liquor stores, hotels and gambling facilities. Recent electronic machine gaming has been strong in Victoria, Queensland and South Australia,” Paterno told The Bull.
Buying Endeavor shares now will support the idea that Australians will continue to drink through the tougher part of the economic cycle.
Paterno is pleased with the direction the business is taking.
“Group sales in the first quarter of the financial year 2023 were 3.1% higher than the previous corresponding period,” he said.
“The company offers diversified revenue streams and a bright outlook.”
The Endeavor share price has been up and down over the past year, but is now up 3.8%. The stock pays out a dividend yield of 2.36%.
However, Paterno’s peers are somewhat divided on the alcohol retail giant. According to CMC Markets, five out of nine analysts rate it a buy, but three others encourage investors to sell.
Question for decades
If you want evidence of how quickly the world can change in just one year, look no further than coal mining stocks.
Just 12 months ago, ASX coal-related stocks were untouchable. The theory was that sooner or later environmental requirements would catch up with these companies, so avoid them like the plague.
But after a war in Ukraine and energy prices rising like this generation has never experienced, coal producers have gained remarkable popularity.
Paterno’s current pick, New Hope Corporation Limited (ASX: NHC), has seen its share price rise a whopping 160.8% over the past year.
The party will go on, as far as Paterno is concerned.
“Asia is expected to remain a relative bright spot for coal demand in the coming decades,” he said.
“Near-term thermal coal prices remain high due to supply issues as the war in Ukraine reinforces the need for energy security.”
High coal prices have enabled New Hope to “generate strong free cash flow and return cash to shareholders through fully franked dividends”, Pateno said.
“We expect an attractive dividend yield this financial year based on the current share price.”
