The Best Stocks To Buy Right Before The Market Bottom Include Netflix And Other Tech Companies

While the stock market hasn't reached its lows yet, Morgan Stanley says there are some stocks that are worth buying before it reaches its trough.

‍

A heated debate takes place on Wall Street about whether or not the stock market is set to rally in the near future or whether it still has a lot of room to fall. In the past few days, the stock market has slid from its February highs as the Federal Reserve has continued on its path of aggressive monetary policy despite strong jobs and inflation data.

‍

As more economic data are forthcoming and interest rate hikes loom, Morgan Stanley analysts, led by Andrew Pauker, believe the stock market bottom hasn't been seen just yet.

‍

“It is our expectation that the earnings backdrop will continue to deteriorate over time," Pauker wrote in his research note. “There is no doubt that we are experiencing a negative risk/reward backdrop today, which is in large part due to the Fed's policy of hiking rates at a sustained pace during an earnings recession.”

‍

It is important to remember that even though there is a possibility that stocks will fall further in the weeks ahead, Pauker recommends 16 stocks to buy before the trough hits.

‍

“It is generally agreed that defensives, growth, and quality tend to outperform into the trough. Among the three factors, we prefer quality and defensives within the tech sector and the broader market into this cycle's durable low, as we see them as more insulated from cyclical risks and less rate-sensitive than growth over the long run," Pauker said.

‍

He recommends buying the following 16 stocks before the bottom: Liberty Media Formula One (FWONK), Comcast CMCSA –0.29% (ticker: CMCSA), Netflix NFLX +0.56%  (NFLX), CDW ( CDW ), IBM (IBM), Teradata (TDC), Visa (V), Instructure Holdings (INST), ServiceNow (NOW), Workday (WDAY), Match Group (MTCH), Microchip Technology (MCHP), Motorola Solutions (MSI), Crown Castle ( CCI ), T-Mobile (TMUS), and Verizon Communications (VZ).

‍