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Strong balance sheet stocks are safer equities to own during this market turmoil, according to AB Bernstein.
The Wall Street firm expects the market to pull back over the next quarter, or at least experience a period of heightened volatility as the economic calamity of the coronavirus persists.
"The market multiples look vulnerable given the scale of the recession we are likely facing, plus uncertainties remain over easing of restrictions," AB Bernstein analyst Sarah McCarthy told clients.
The firm said it favors "High Balance Sheet quality stocks" which should offer tactical downside protection should the market sell-off. McCarthy noted this group of stocks outperformed in the last drawdown, during the financial crisis.
AB Bernstein created a list for clients of quality stocks with strong balance sheets. The firm measure balance sheet quality as a combination of low leverage plus high credit rating, from Moody's. This means the companies don't have large amount of debt and bank's are willing to lend the businesses money. The firm also has a buy rating on all the listed stocks.
Take a look at the firm's "high balance sheet quality" stocks here.
