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Jefferies Likes Alphabet, Apple Amid Peaking Economic Growth
By: TheStreet | December 10, 2021

• 'We envisage a [2022] macro environment in which growth has peaked, while inflation remains sticky,' Jefferies analysts said.

Jefferies analysts have put together a list of stocks that they think will stand up to peaking economic growth and sticky inflation next year, including Alphabet (GOOGL), Apple (AAPL) and Walmart (WMT).

“We envisage a macro environment in which growth has peaked, while inflation remains sticky, forcing central banks to withdraw liquidity,” they wrote in a commentary, cited by CNBC.

“At the same time, there is fiscal stimulus in the U.S. and Japan which continues to cushion growth.”

MSCI AC World index stocks will see earnings growth drop to 6.1% in 2022 from 49.3% this year, the analysts predicted. They see U.S. earnings growth exceeding 10% next year.

“While earnings growth would still be reasonably high, stretched valuations amid relatively tighter monetary conditions would limit the upside,” they said. “Overall, [developed markets] remain a favorite, led by the U.S. and Japan.”

In this environment, the analysts like value stocks that don’t face structural problems, reasonably-priced growth stocks and quality stocks.

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Morningstar analyst Ali Mogharabi likes Alphabet too, assigning it a wide moat and putting fair value at $3,400, compared to its recent quote of $2,952.

In an October commentary after the company’s latest earnings report, he said he’s impressed with “further YouTube and other Google apps monetization opportunities and the firm’s increasing traction in the cloud market.”

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