In this article, we will discuss the 15 Best Large-Cap Value Stocks to Buy as the Recession Hits.
Goldman Sachs highlighted that equities around the world traded in and out of a bear market — which is often defined as a 20% decline from the recent peak. According to Peter Oppenheimer, chief global equity strategist at Goldman Sachs Research, the history of bear markets can provide some clues regarding the duration and severity of such downturns. U.S. stocks ended significantly higher after Trump announced his decision to put a 90-day pause on the additional country-specific portion of the reciprocal tariffs. That being said, Oppenheimer believes that a sustained rebound isn’t yet in place. As per the strategist, the valuations are required to adjust further before equities can shift into the “hope” phase of the next cycle.
What to Expect from Current Earnings Season?
With the Q1 2025 earnings season underway, Morningstar informs that investors can expect more focus than usual on what companies want to say regarding their outlooks, while the uncertainty surrounding tariffs means offering weaker, less confident, or even no guidance. Tariffs can impact the corporate bottom lines in several ways, both directly and indirectly. Notably, the increased import costs put more pressure on the margins. While some firms can decide to alleviate the pressure by increasing the prices for customers, others can choose to absorb them, says the firm. Morningstar, while quoting FactSet’s consensus estimates, mentioned that analysts expect 6.8% earnings growth in Q1 for companies in the S&P 500 benchmark index. For the full year, analysts anticipate an 11.2% growth.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Amidst Tensions, What’s the Silver Lining?
Forward guidance is what generally moves the financial markets. If the firm warns that there can be a possibility to see smaller profits, the stock tends to fall. This might happen across the market, but there is a silver lining. As per Morningstar chief research and investment officer Dan Kemp, it is important to note that most of the value lies in the future. Therefore, the impact on the company’s real value is expected to be muted. According to him, widening of the gap between stock prices and future real values can be a very fertile soil for the market investors.
Christian Mueller-Glissmann, head of asset allocation research within portfolio strategy for Goldman Sachs Research, says that investors need to think about diversifying regionally and across styles. To be specific, this consists of low-volatility stocks, i.e., equities from more defensive sectors, that fluctuate less than the broader market.
Amidst these thoughts, let us now have a look at the 15 Best Large-Cap Value Stocks to Buy as the Recession Hits
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Our Methodology
To list the 15 Best Large-Cap Value Stocks to Buy as the Recession Hits, we considered companies from the industries which are expected to be resilient in a recessionary environment, such as utilities, healthcare, and consumer. Next, we chose the stocks that trade at a forward P/E of less than ~20.0x. Finally, the stocks are arranged in ascending order of the hedge fund sentiments, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
15 Best Large-Cap Value Stocks to Buy as the Recession Hits
15. Dominion Energy, Inc. (NYSE:D)
Number of Hedge Fund Holders: 39
Forward P/E as of April 15: ~15.7x
Dominion Energy, Inc. (NYSE:D) offers regulated electricity and natural gas services. Morgan Stanley analyst David Arcaro upped the company’s price objective to $63 from $60, keeping an “Equal Weight” rating. The firm updated price targets for North American Regulated and Diversified Utilities/IPPs, says the analyst. Key points from the annual Energy & Power Conference consist of strong demand from data centers, renewables defense with safe harboring, among others. Dominion Energy, Inc. (NYSE:D) provided updates for the Coastal Virginia Offshore Wind (CVOW) project. The 2.6 GW, fully permitted project remains ~50% complete and is on track for on-time completion at 2026 end.
CVOW is expected to create $2 billion of economic activity. Dominion Energy, Inc. (NYSE:D) believes that the project is an affordable source of electricity for Dominion Energy Virginia customers, with robust cost-sharing mechanisms protecting customers and shareholders. Dominion Energy, Inc. (NYSE:D) narrowed its existing 2025 operating earnings guidance range to $3.28 – $3.52 per share, which includes estimated RNG 45Z income, preserving the midpoint of $3.40 per share. Overall, the company’s investments in renewable energy, together with strategic positioning in the broader data center market, are expected to fuel long-term growth. The expansion of data centers, driven by the rise of AI, continues to fuel electricity demand growth.
14. American Electric Power Company, Inc. (NASDAQ:AEP)
Number of Hedge Fund Holders: 47
Forward P/E as of April 15: ~18.0x
American Electric Power Company, Inc. (NASDAQ:AEP) is an electric public utility holding company. It is engaged in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers. BMO Capital remains optimistic about the company’s stock as the firm sees its equity raise positively because it removes the equity/credit overhang on the stock. On March 24, American Electric Power Company, Inc. (NASDAQ:AEP) announced pricing of the registered underwritten offering of 19,607,844 shares of common stock at a price to the public of $102.00 per share.
The focus on decarbonizing the generation fleet remains in line with the overall industry trends and regulatory pressures to reduce carbon emissions. The transition to clean energy can create numerous investment prospects in renewable generation, energy storage, and grid modernization. American Electric Power Company, Inc. (NASDAQ:AEP)’s large service territory offers numerous opportunities to allocate capital in such areas. In 2024, the company saw significant load growth in its commercial class, mainly because of economic development in Indiana, Ohio, and Texas. American Electric Power Company, Inc. (NASDAQ:AEP) expects an 8% – 9% annual total retail load growth from 2025-2027 and targets to serve over 20 gigawatts of new load by the decade’s end. The company’s $54 billion, 5-year capital plan supports the opportunity.
13. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 49
Forward P/E as of April 15: ~13.7x
General Mills, Inc. (NYSE:GIS) is engaged in manufacturing and marketing branded consumer foods. Analyst Peter Galbo from Bank of America Securities reiterated a “Buy” rating on the company’s stock. This rating is backed by a combination of factors, including its strategic investment plans and future growth potential. As per the analyst, General Mills, Inc. (NYSE:GIS) can achieve significant savings with the help of holistic margin management and additional cost-saving measures. This will be reinvested in the pricing strategies. Therefore, General Mills, Inc. (NYSE:GIS) remains positioned for positive medium-term growth prospects throughout critical geographies and categories, says Galbo.
With the help of continued research, development, and marketing, Morningstar expects the company’s portfolio of strong brands to maintain an intangible edge. This investment supports products that sell well, fueling traffic that entrenches General Mills, Inc. (NYSE:GIS)’s relationships with retailers, says the firm. The company is focused on improving its sales growth in fiscal 2026 by stepping up the investment in innovation, brand communication, and value for consumers. General Mills, Inc. (NYSE:GIS) plans to finance that investment with another year of industry-leading HMM productivity, together with anticipated new cost-saving initiatives focused on further boosting its efficiency and driving growth.
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