5 Stocks To Buy And 5 To Avoid If 2026 Brings A Downturn

Bonisiwe Shabane

-Jan 2, 2026, 5:26 PM

5 stocks to buy and 5 to avoid if 2026 brings a downturn

It’s getting frothy out there. Pick any stock market metric, whether it’s the Nasdaq’s closing price or a more technical measure like the Shiller P/E ratio, and the number will look unusually large. Throw in crazy AI valuations, for privately held startups and publicly traded stocks alike, and what we’re seeing looks a lot like a bubble. Perhaps this time is different. But note that phrase served as the ironic title of an acclaimed 2011 book by economists Carmen Reinhart and Kenneth Rogoff—a work whose subtitle is “Eight Centuries of Financial Folly.” In any case, if... This section of this year’s Investor’s Guide offers some ideas on how to go about that.

We offer tips on how to play defense in the current stock market (spoiler: Candymakers are a sweet bet for sour times). We also devote some space to stocks that might be best held at arm’s length; whatever these companies’ ultimate fates might be, these aren’t the times or the prices at which to be a... And for optimists, we have a preview of some buzzy rumored IPOs coming next year. Choppy markets can make for attractively priced debuts: Perhaps you will find the next UPS, which went public right before the dotcom bust, or Visa, which listed on the eve of the 2008 financial... We’ll also weigh in on gold and Bitcoin. In the wake of Warren Buffett penning his final letter to investors, it feels fitting to say his most famous adage applies like never before: Be greedy when others are fearful, and fearful when...

Jim Masturzo, chief investment officer of multi-asset strategies at investment manager Research Affiliates, says a good first step is to diversify beyond stocks to TIPS (Treasury Inflation-Protected Securities) or commodities like gold. When it comes to equities, Roger Aliaga-Diaz, Vanguard chief economist in the Americas, advises embracing value stocks—stocks whose prices are low relative to their earnings. Not all value stocks are created equal, of course. Here are some categories and names to consider that are likely to fare well in an economic downturn (prices are as of market close Nov. 13): AEE Quick QuoteAEE SRE Quick QuoteSRE MNST Quick QuoteMNST MAMA Quick QuoteMAMA

The Federal Reserve reduced interest rates by 25 basis points at the end of its December Federal Open Market Committee meeting. This reduction in rate was highly anticipated by the market, lowering the federal funds rate to a target range of 3.5% to 3.75%.Given the current uncertainty relating to the path to be followed by... Consumer staples stocks like Monster Beverage (MNST Quick QuoteMNST - Free Report) and Mama's Creations, Inc. (MAMA Quick QuoteMAMA - Free Report) currently sport a Zacks Rank #1 (Strong Buy). Utilities stocks like Dominion Energy (D), Ameren Corporation (AEE Quick QuoteAEE - Free Report) and Sempra Energy (SRE Quick QuoteSRE - Free Report) all currently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Also, these stocks mentioned above belong to the category of low-beta stocks (beta greater than 0 but less than 1).

In addition, all these stocks are expected to come out with earnings growth in 2026 along with a favorable Zacks Rank. Jerome Powell’s term as chair of the Federal Reserve is set to end on May 15, 2026, and a new leader is expected to take over the role at that time. The Federal Reserve lowered interest rates three times in 2025 amid mixed data about inflation and unemployment. As the new chair takes office, clearer insight into how the Federal Reserve will operate under new leadership is likely to emerge in the second half of 2026, since three of the four scheduled... A key question is whether the current pace of rate declines will be maintained or if the Fed will move toward more aggressive cuts. Ultimately, decisions on interest rates will continue to be shaped by core factors such as inflation trends, economic growth, consumer spending, and labor market conditions, which will guide both the formulation and timing of...

Decline in interest rates undoubtedly makes utilities more profitable as it lowers capital servicing costs and boosts the margin of the company. As the Federal Reserve prepares for a leadership transition in 2026, policy uncertainty is likely to remain elevated. Markets will closely watch whether the new Chair will be able to continue with the current rate cut levels or come out with a more aggressive easing stance. The period of uncertainty when the Fed baton changes hands is the lack of clarity around future policy direction under new leadership. Until the new chair establishes credibility and communicates clear priorities, investors face uncertainty over the pace of rate cuts.This uncertainty can heighten short-term market swings, especially for high-beta stocks that are more sensitive to... So low-beta stocks can be an ideal pick for investors amid the period of uncertainty.

We have used the Zacks Stocks Screener to shortlist five stocks from the consumer staples and utilities sector having a Zacks Rank #1 or a Zacks Rank #2 and a beta of less than... All these stocks are expected to continue their strong performance next year. All stocks mentioned below also registered a gain in the last 12 months. Each year, we ask an expert to pick 10 stocks that have the potential to beat the market over the next 12 months. Here are his choices for 2026. When you purchase through links on our site, we may earn an affiliate commission.

Here’s how it works. For more than 30 years, I have offered an annual list of 10 stock picks with the potential to beat the market in the 12 months ahead. My selections for 2024 notched the highest return ever, but my choices for 2025 flamed out. They scored an average of a mere 5.9%, compared with 21.5% for the benchmark S&P 500 Index. Six out of 10 stocks fell, four by more than 20% each. What hurt me most?

Not having any of the mega-capitalization tech stocks that provided the lift for the S&P 500. I correct the oversight this time around. I am still ahead of the game by about three percentage points over the past 10 years, but mean reversion is dragging me down to the index, which is what is supposed to happen... Following tradition, I have chosen nine stocks for 2026 from the broader choices of experts that I trust, and I include one of my own. The S&P 500 just completed a three-peat of double-digit gains. Will 2026 be a four-peat?

After three years of stellar gains, Wall Street widely expects the good times to keep rolling in 2026 — but with varied views on how much stocks will rally. Wall Street forecasts reviewed by CNN show a wide range of targets from strategists, though all estimate positive gains. The S&P 500 ended 2025 at 6,845.5 points. Analysts at Bank of America expect the benchmark index to hit 7,100 by year-end 2026, suggesting a roughly 3.72% gain from now. Meanwhile, analysts at Deutsche Bank expect the S&P to hit 8,000 points by year-end, suggesting a gain of 16.87%. When the S&P 500 has gained at least 15% in a year, the following year’s returns have averaged about 8%, according to Adam Turnquist, chief technical strategist at LPL Financial.

The S&P in those years had an average decline of roughly 14% at some point before rebounding and climbing higher. It’s a reminder that stock market gains are not always straightforward, Turnquist said. Got a confidential news tip? We want to hear from you. Sign up for free newsletters and get more CNBC delivered to your inbox Get this delivered to your inbox, and more info about our products and services.

© 2026 Versant Media, LLC. All Rights Reserved. A Versant Media Company. Data is a real-time snapshot *Data is delayed at least 15 minutes. Global Business and Financial News, Stock Quotes, and Market Data and Analysis. I did the same thing in the beginning of 2025, and I want to start this article by reviewing the performance of my last year's picks.

The five stocks I picked last time were ASML ( Analyst’s Disclosure:I/we have a beneficial long position in the shares of GOOG, ASML, TGOPF, AMZN, CRM, NBIS, NVO, HIMS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results.

No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. It’s getting frothy out there. Pick any stock market metric, whether it’s the Nasdaq’s closing price or a more technical measure like the Shiller P/E ratio, and the number will look unusually large.

Throw in crazy AI valuations, for privately held startups and publicly traded stocks alike, and what we’re seeing looks a lot like a bubble. Perhaps this time is different. But note that phrase served as the ironic title of an acclaimed 2011 book by economists Carmen Reinhart and Kenneth Rogoff—a work whose subtitle is “Eight Centuries of Financial Folly.” In any case, if... This section of this year’s Investor’s Guide offers some ideas on how to go about that. We offer tips on how to play defense in the current stock market (spoiler: Candymakers are a sweet bet for sour times). We also devote some space to stocks that might be best held at arm’s length; whatever these companies’ ultimate fates might be, these aren’t the times or the prices at which to be a...

And for optimists, we have a preview of some buzzy rumored IPOs coming next year. Choppy markets can make for attractively priced debuts: Perhaps you will find the next UPS, which went public right before the dotcom bust, or Visa, which listed on the eve of the 2008 financial... We’ll also weigh in on gold and Bitcoin. In the wake of Warren Buffett penning his final letter to investors, it feels fitting to say his most famous adage applies like never before: Be greedy when others are fearful, and fearful when... Jim Masturzo, chief investment officer of multi-asset strategies at investment manager Research Affiliates, says a good first step is to diversify beyond stocks to TIPS (Treasury Inflation-Protected Securities) or commodities like gold. When it comes to equities, Roger AliagaDiaz, Vanguard chief economist in the Americas, advises embracing value stocks—stocks whose prices are low relative to their earnings.

Not all value stocks are created equal, of course. Here are some categories and names to consider that are likely to fare well in an economic downturn (prices are as of market close Nov. 13):

5 Stocks To Buy And 5 To Avoid If 2026 Brings A Downturn

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