With stock markets yet to emerge from the doldrums of a brutal first half sell-off, investors are increasingly seeking strategies to preserve and grow their capital. Asset manager Jack Ablin tells CNBC how he’s trading the market volatility, highlighting some of his top stocks along the way. Investors should be putting their money in companies with high-quality balance sheets, strong and consistent dividends, and which are “trading at a sizable discount to the rest of the market,” according to Ablin, founding partner and chief investment officer at Cresset Capital . His portfolio of “quality and dividend growers” includes Exxon Mobil and Chevron in the energy space, as well as Coca-Cola and McDonalds in the consumer sector. “These are companies that are dividend achievers or dividend aristocrats that have had a 25-year history of maintaining and growing their dividends,” Ablin told CNBC “Squawk Box Asia” on Thursday. Shares in Exxon Mobil and Chevron are up 36.1% and 20% respectively this year, helped by soaring oil prices. But Ablin thinks the stocks still look cheap relative to their peers. “Chevron, for example, is trading at a forward [ price-to-earnings ratio ] of about 8 with a nice 4% dividend yield, which has also been pretty consistent — this is a company that has maintained and grown its dividend over time,” he said. “Exxon is similarly positioned, with a forward P/E ratio [of about] 11,” he added. The company has a dividend yield of 4.2%, according to FactSet data. Ablin said both stocks were “trading at a pretty substantial discount to the rest of the market” right now. ‘The place to be for the next four quarters’ Looking ahead, Ablin said “quality and dividends are probably the place to be for the next four quarters.” He noted that quality stocks are trading at the “biggest discount” to the rest of the market he has ever seen. So-called quality stocks have several characteristics, including low debt, stable earnings and consistent asset growth. Meanwhile, dividend stocks are also growing in popularity, as investors pivot to stocks that offer relative safety and higher yields. Ablin also believes FAANG stocks will ” come back in vogue” once the pandemic is over. The FAANG grouping refers to the stocks of five big tech companies: Facebook parent Meta , Amazon , Apple , Netflix and Google parent Alphabet . Read more ‘Dividend aristocrats’: Strategists name high-yie lding stocks to ride out a bear market Citi names its ‘highest conviction ideas’ for the second half of 2022 — and gives one upside of 85% Wall Street believes these beaten-down global stocks are set for a rebound With regards to the chance of a US recession, Ablin acknowledged that the risks are rising, but said he does not expect a downturn to the magnitude of 2008. During the recession of 2008, the S & P 500 fell 56.8% from peak to trough from October 2007 to March 2009 , with much of the decline (48%) occurring in the brief period around the climax of the crisis in the fall of 2008. “I do believe we are going into a recession, but I don’t think it’s a recession that is going to stay with us for a while,” Ablin said.
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