Citi strategist expects weakness in early 2023 is a buying opportunity. Here are his large-cap stock picks

US Top News and Analysis

With recession risks in focus for investors positioning for 2023, Citi strategist Scott Chronert refreshed his large-cap stock picks for the year ahead. Like others on Wall Street, Chronert holds the view that the S & P 500 will wind up flat for the year after dealing with ongoing volatility from persistent inflation and rising interest rates. According to a Tuesday note, the strategist projects the broader market index will hit 3,700 mid-year, while rising to 4,000 at year-end. For investors, that means any volatility in the first part of 2023 could be used to their advantage. “Implicit in our S & P 500 index price and earnings expectations is the view that this may be the most widely anticipated recession in decades,” Chronert wrote last month. “Thus, investors need to allow that historic recession playbooks may disappoint. We look for index weakness early in the year as a buying opportunity.” The Citi strategist on Tuesday refreshed his large-cap focus list for the new year, adding 10 names that could fall into one or more of four categories. These include firms that are tech users, have quality attributes, offer thematic/growth exposure at a reasonable price or are defensive picks during market volatility. Here are five of his stock additions. Chronert added T-Mobile to the bank’s large cap focus list, saying the telecommunications stock is a defensive pick. On Tuesday, Chronert said that T-Mobile has “strong operating momentum and opportunity to realize merger-related synergies.” Home improvement retailer Tractor Supply is another addition to the list. The stock was named a top pick by Citi’s hardlines retail team. The company has “impressive top-line growth with expansion prospects on steady unit growth and shifting consumer preferences.” Deere will outperform as it increasingly positions itself as a tech company, according to Citi. The maker of agricultural machinery is investing more into advanced battery technology , as well as autonomous tractors and other farm equipment. The strategist also named Bank of New York Mellon a top pick because of its “limited credit risk,” according to the note. Meanwhile, HCA Healthcare is a defensive pick expected to benefit from “improving labor supply” this year, according to the note. — CNBC’s Michael Bloom contributed reporting.