Investors looking for protection — and possibly even outperformance — this year will benefit from being more selective about the quality stocks they buy, according to Bernstein. The market has had a strong start to 2023, with all three major indexes up year-to-date. However, the potential of a recession and further interest rate hikes by the Federal Reserve have investors uncertain as to how long the rally can last . Against such a backdrop, investors would normally buy into high-quality stocks.
A forward price-to-earnings ratio looks at a stock's current share price, divided by its predicted earnings per share over the following 12 months. Shares of Microsoft gained more than 3% on Monday, bringing their year-to-date gains to nearly 15%. The company recently announced its new AI-powered Bing search browser last week, which has excited investors despite ongoing challenges in the PC market.