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June 24, 2022, 8:22 a.m. EDT

These 16 stocks could show ‘fundamental resiliency’ in tough times

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By Emily Bary

Amid a more precarious economic backdrop, analysts at Macquarie think that stocks including Visa Inc., Planet Fitness Inc., Trade Desk Inc., and lotto operator International Game Technology PLC could demonstrate “fundamental resiliency.”

Within the payments universe, the Macquarie team gravitates toward Visa /zigman2/quotes/203660239/composite V +2.41% and Mastercard Inc. /zigman2/quotes/207581792/composite MA +1.60% , two stocks that “have been holding the line through the current spike in volatility” and have previously shown to be “impressively resilient through recessions thanks to their scale, innovation, and structural tailwinds in digital payments.”

The “structural growth” of the card networks could help them hold up in the face of any weakness in volumes, the analysts continued.

On Mastercard specifically, they like the company’s positioning in cross-border payments, emerging markets, and newer areas such as digital identity and open banking. For Visa, they note that the company has taken “proactive measures” on cryptocurrency that “could help close the proportional gap on developing-market exposure with rival Mastercard and position Visa to benefit from greater economic participation in weak-currency markets.”

Within the leisure sector, the analysts see promise in a newer name that wasn’t public at the time of the last economic downturn. Planet Fitness /zigman2/quotes/203234487/composite PLNT +2.03% could continue to offer an attractive value proposition for consumers, they reason, by appealing to people looking to “trade down” from more expensive gyms, as well as appearing “too cheap to cancel” for current members.

“Store unit economics are back to historic levels, and demand per existing location is accelerating, highlighting the runway ahead for new unit growth,” they wrote. “The company has plenty of both domestic and international franchising ahead in our view, and a value proposition to the consumer if macro sentiment deteriorates ($10/month base membership, $24.99/month for Black Card members).”

Madison Square Garden Sports Corp. /zigman2/quotes/203292767/composite MSGS +0.21% , which manages the New York Knicks and Rangers, could be another leisure play, per the analysts. The company “has significant contracted revenue from sports media rights, and we argue the heritage of its teams, not to mention in the largest market, should drive and hold value through broader market turmoil,” they said.

Software picks include ServiceNow Inc. /zigman2/quotes/202729495/composite NOW -0.48% , Atlassian Corp. PLC /zigman2/quotes/207177221/composite TEAM +1.84% , Instructure Holdings Inc. /zigman2/quotes/200628597/composite INST -0.81% , and VMware Inc. /zigman2/quotes/209864107/composite VMW +0.38% , based on the assumption that “best-of-breed software-as-a-service (‘SaaS’) companies can provide shareholders with solid cash-flow-generative assets that are supported by sticky enterprise customer bases.”

ServiceNow has a “substantial global enterprise customer base” that “provides ample cross-sell and up-sell opportunities, which can support growth even in adverse market environments,” while Atlassian has a strong self-service sales model that allows it to limit marketing spending, the analysts wrote. Admittedly, Atlassian has “relatively higher exposure to small to mid-sized businesses,” but the Macquarie team says the company showed at the start of the pandemic that it could withstand events that pressured smaller businesses.

As for Instructure, the analysts note that the company caters to educational customers in the higher-education and K-12 markets. “We like Instructure’s positioning as the market share leader in the learning management system (‘LMS’) market for U.S. higher-education institutions, which we believe are a stable customer base similar to corporate enterprises,” they wrote.

VMware holds promise “because of the upcoming tailwinds from its transition to a SaaS model (vs. perpetual license), sticky customer base, and implicit put option from the recently announced acquisition by Broadcom /zigman2/quotes/200646538/composite AVGO +0.13% ,” they continued.

The analysts are also betting that consumers will still play the lottery in tough times, noting that the lottery business was “resilient” in the last financial crisis and at the start of the pandemic, while the businesses that operate in this industry have entrenched relationships.

“In our view, the lottery industry is a remarkably stable and consistent business, displaying consistent growth through economic cycle,” the analysts wrote, highlighting International Game Technology PLC /zigman2/quotes/202670793/composite IGT -2.32% and NeoGames S.A. /zigman2/quotes/222596027/composite NGMS +4.34% .

Gaming companies could hold up, too, with the analysts calling out Penn National Gaming /zigman2/quotes/209264611/composite PENN -0.66% , MGM Resorts International /zigman2/quotes/209932643/composite MGM -0.17% , and Caesars Entertainment Inc. /zigman2/quotes/205281174/composite CZR +0.08% as favored picks.

Additionally, they see potential in ad-technology companies Applovin Corp. /zigman2/quotes/226004863/composite APP -7.63% , The Trade Desk /zigman2/quotes/207508089/composite TTD +1.24% , and IronSource Ltd. /zigman2/quotes/223883410/composite IS +10.97% , citing “their relative resilience through targeted marketing, secular growth in mobile and connected TV, and low valuation.”

/zigman2/quotes/203660239/composite
US : U.S.: NYSE
$ 216.42
+5.09 +2.41%
Volume: 5.29M
Aug. 15, 2022 4:00p
P/E Ratio
32.62
Dividend Yield
0.69%
Market Cap
$437.21 billion
Rev. per Employee
$1.31M
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/zigman2/quotes/207581792/composite
US : U.S.: NYSE
$ 359.95
+5.68 +1.60%
Volume: 2.53M
Aug. 15, 2022 4:00p
P/E Ratio
36.47
Dividend Yield
0.54%
Market Cap
$342.36 billion
Rev. per Employee
$868,958
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/zigman2/quotes/203234487/composite
US : U.S.: NYSE
$ 78.25
+1.56 +2.03%
Volume: 740,512
Aug. 15, 2022 4:00p
P/E Ratio
106.77
Dividend Yield
N/A
Market Cap
$6.98 billion
Rev. per Employee
$489,871
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/zigman2/quotes/203292767/composite
US : U.S.: NYSE
$ 159.94
+0.33 +0.21%
Volume: 150,425
Aug. 15, 2022 4:00p
P/E Ratio
53.18
Dividend Yield
N/A
Market Cap
$3.87 billion
Rev. per Employee
$1.21M
loading...
/zigman2/quotes/202729495/composite
US : U.S.: NYSE
$ 504.07
-2.44 -0.48%
Volume: 992,996
Aug. 15, 2022 4:00p
P/E Ratio
556.74
Dividend Yield
N/A
Market Cap
$102.32 billion
Rev. per Employee
$390,972
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/zigman2/quotes/207177221/composite
US : U.S.: Nasdaq
$ 288.47
+5.22 +1.84%
Volume: 1.24M
Aug. 15, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$72.32 billion
Rev. per Employee
$435,704
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/zigman2/quotes/200628597/composite
US : U.S.: NYSE
$ 24.54
-0.20 -0.81%
Volume: 221,414
Aug. 15, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$3.51 billion
Rev. per Employee
$347,508
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/zigman2/quotes/209864107/composite
US : U.S.: NYSE
$ 122.42
+0.46 +0.38%
Volume: 773,662
Aug. 15, 2022 4:00p
P/E Ratio
31.61
Dividend Yield
N/A
Market Cap
$51.40 billion
Rev. per Employee
$345,200
loading...
/zigman2/quotes/200646538/composite
US : U.S.: Nasdaq
$ 558.96
+0.73 +0.13%
Volume: 1.43M
Aug. 15, 2022 4:00p
P/E Ratio
27.71
Dividend Yield
2.93%
Market Cap
$225.42 billion
Rev. per Employee
$1.50M
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/zigman2/quotes/202670793/composite
US : U.S.: NYSE
$ 21.92
-0.52 -2.32%
Volume: 1.68M
Aug. 15, 2022 4:00p
P/E Ratio
28.24
Dividend Yield
3.65%
Market Cap
$4.60 billion
Rev. per Employee
$391,570
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/zigman2/quotes/222596027/composite
US : U.S.: Nasdaq
$ 18.27
+0.76 +4.34%
Volume: 148,854
Aug. 15, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$447.64 million
Rev. per Employee
$160,353
loading...
/zigman2/quotes/209264611/composite
US : U.S.: Nasdaq
$ 37.45
-0.25 -0.66%
Volume: 1.78M
Aug. 15, 2022 4:00p
P/E Ratio
31.57
Dividend Yield
N/A
Market Cap
$5.98 billion
Rev. per Employee
$285,596
loading...
/zigman2/quotes/209932643/composite
US : U.S.: NYSE
$ 35.54
-0.06 -0.17%
Volume: 3.36M
Aug. 15, 2022 4:00p
P/E Ratio
4.97
Dividend Yield
0.03%
Market Cap
$13.99 billion
Rev. per Employee
$201,417
loading...
/zigman2/quotes/205281174/composite
US : U.S.: Nasdaq
$ 51.41
+0.04 +0.08%
Volume: 2.17M
Aug. 15, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$11.01 billion
Rev. per Employee
$212,020
loading...
/zigman2/quotes/226004863/composite
US : U.S.: Nasdaq
$ 33.55
-2.77 -7.63%
Volume: 4.26M
Aug. 15, 2022 4:00p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$13.73 billion
Rev. per Employee
$1.83M
loading...
/zigman2/quotes/207508089/composite
US : U.S.: Nasdaq
$ 75.41
+0.92 +1.24%
Volume: 5.95M
Aug. 15, 2022 4:00p
P/E Ratio
1,148
Dividend Yield
N/A
Market Cap
$36.23 billion
Rev. per Employee
$706,138
loading...
/zigman2/quotes/223883410/composite
US : U.S.: NYSE
$ 4.45
+0.44 +10.97%
Volume: 38.17M
Aug. 15, 2022 4:00p
P/E Ratio
69.10
Dividend Yield
N/A
Market Cap
$4.10 billion
Rev. per Employee
$598,722
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