'Boring. That's the key': Investor recommends 6 big-cap stocks for another rocky year ahead

Published Wed, Dec 21 20228:46 PM EST

The stock market has been extremely rocky this year, and market watchers aren't expecting that to change in 2023. "I think what people need to recognize is that there is going to continue to be tremendous volatility in the markets and there needs to be a catalyst out there to make stocks go up," Michael Yoshikami, founder and CEO of Destination Wealth Management, told CNBC's " Street Signs Asia " on Tuesday. But it's not all gloom and doom for investors. "You have to look past this moment and look out six to nine months. That's why there may be opportunities available in the market right now because the markets are already assuming things are going to be horrible next year. In my view, it's not going to be horrible, there might be a shallow recession, but I don't see something cataclysmic happening," he added. Play it safe Yoshikami said there's a "reasonable chance" the U.S. Federal Reserve will cut interest rates next year, but a full market recovery will likely take two years, judging from previous bear markets. "Companies that sell at an attractive price point to consumers during recessions are attractive investment targets … Companies with no earnings will continue to be under pressure, particularly those funded by venture capital and private equity that can no longer capture low interest rate loans," Yoshikami wrote in notes to CNBC. Against this backdrop, Yoshikami thinks investors should play it safe. "Boring. That's the key," he said. "The alternative is you pull the money out of the market, you put it in cash till the market comes back. So, this is a way for you to safely still be in the market in more defensive names while still being able to participate in the market if it rises." Stock picks While many investors shunned tech stocks this year, including the biggest names in the sector, Yoshikami has three Big Tech stocks among his top picks. He likes Apple for its expanding customer base, effective omnichannel sales and exposure to secular tailwinds. E-commerce giant Amazon makes his list too. Yoshikami said Amazon is "well positioned" to join Alphabet and Meta as the third major player in digital advertising, while the company is also poised to expand margins as it transitions from low margin to higher margin businesses. The company is also rapidly growing its Prime memberships, which it could monetize in the future, he added. Yoshikami also likes Alphabet for its digital advertising platform and "dominant" global market position in search. He also likes Johnson & Johnson for its "attractive" dividend payout. He added that the company is a "healthcare bellwether" with a diversified revenue stream and global presence, as well as an "emerging growth story" on the back of its "blockbuster-potential drugs." Costco is another stock that Yoshikami likes, given the company's "solid track record as a well operated and efficient" retailer. The company also enjoys a "high level" of customer loyalty and has opportunities to expand internationally, according to Yoshikami. Rounding off his list is Airbus . "I think you're going to continue to see a significant spike in travel. There obviously was a lag in orders during the pandemic. I think you are going to see a snapback in orders, not only with Airbus, but also with Boeing ," Yoshikami said. Buying shares in Airbus will allow investors to participate in airline upgrade cycles — a growth area in Yoshikami's view. He favors Airbus over Boeing given the former's net cash financial position. Boeing has a net debt position. "Given the high operating leverage these businesses face, the stronger financial position of Airbus is a key advantage," Yoshikami said.