Portfolio manager JoAnne Feeney of Advisors Capital Management tells In the Money with Amber Kanwar 3 high-conviction stocks sitting at records that she’s buying now: TJX Companies (TJX) – a resilient retail play for recessionary times, Quest Diagnostics (DGX) – a demographic-powered, tariff-proof healthcare duopoly and Broadcom (AVGO) – an AI infrastructure powerhouse outperforming Nvidia.
1. TJX Companies (TJX)
- Why Buy? TJX, parent of TJ Maxx, Marshalls, and HomeGoods, is a bargain-hunter’s paradise, offering premium brands at steep discounts. Joanne emphasizes its dual strength: in economic slowdowns, shoppers shift from high-end retailers like Nordstrom to TJX, boosting foot traffic, while excess inventory from luxury stores provides a cheap supply of goods. This makes TJX a “recession play” with consistent growth in normal times.
- Compelling Arguments:
- Resilience: Thrives in downturns with increased traffic and access to discounted high-end inventory.
- Valuation: At 27x earnings, it’s reasonably priced for its low volatility, making it a portfolio stabilizer.
- Consumer Appeal: Shoppers flock to find brands like Theory or Boss at low prices, ensuring steady demand.
2. Quest Diagnostics (DGX)
- Why Buy? Quest Diagnostics, a leader in diagnostic testing, holds a near-duopoly with LabCorp, capturing most blood work and lab service demand. An aging baby boomer population drives more testing, from routine checkups to complex diagnostics. Its domestic focus shields it from tariff risks, and inelastic demand ensures steady revenue, bolstered by a decent dividend yield.
- Compelling Arguments:
- Demographic Tailwind: Aging population fuels rising demand for lab work.
- Market Dominance: Duopoly with LabCorp limits competition as hospital in-house testing declines.
- Defensive Play: Tariff immunity and inelastic demand make it a stable pick.
- Healthcare Trend: Rising healthcare service usage directly benefits Quest’s volumes.
3. Broadcom (AVGO)
- Why Buy? Broadcom, a semiconductor and software giant, leads in AI chip co-design (e.g., with Google), networking, cybersecurity, and enterprise software. Joanne, who covered the company since its IPO, praises its diversified, high-margin businesses and smart acquisitions that consistently outperform expectations through rapid debt reduction.
- Compelling Arguments:
- AI Growth: Early-stage AI adoption (only 9% of firms use AI, per BLS) positions Broadcom for multi-year growth.
- Market Leadership: #1 or #2 in every segment, from iPhone chips to cybersecurity, ensuring high margins.
- Proven Execution: CEO-led acquisitions deliver higher-than-expected returns, driving stock gains.
- Resilience: AI-driven growth is immune to tariffs and geopolitical risks.
