Stocks such as Hershey and Microsoft could be the best hideout spots as threats of an economic recession linger, according to HSBC. Wall Street got a jolt of volatility recently on disappointing U.S. employment and manufacturing numbers. The unwind of a popular hedge fund trade on the Japanese yen, also sent ripples around global markets. The S & P 500 on Aug. 5 posted its biggest one-day loss since 2022 but has since recovered from that retreat.
According to analyst Stephen Bersey, Microsoft has strong defensive characteristics against macroeconomic weakness, given its business model and strong balance sheet as well as high operating margins. Specifically, Bersey pointed out that most of the tech giant's revenue sources are tied to long-term software as a service, or SaaS, or usage agreements that bind its future revenues with recurring contracts. The length of those contracts are about two to three years, he believes.