Stocks like Nike and McDonald's are well placed in a tough economy - CNBC

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There's a whole bunch of companies that are firing on all cylinders and well-positioned going into the third quarter and second half, according to Wall Street analysts. These stocks also offer defensive potential, analysts say, particularly if the macro environment worsens. Of the nearly 300 companies in the S & P 500 that have so far reported their latest quarter's earnings, almost 78% topped analyst expectations, according to Refinitiv. CNBC Pro combed through top Wall Street research to find companies that analysts believe are continuing to execute well following those earnings. They include: McDonald's , Nike, Citizens Financial, Pool Corp. and Autoliv. Nike The global athletic goods retailer hasn't been immune to supply chain challenges, but investment firm Jefferies says that the stock is just too "attractive" to ignore right now. Shares of the company are up almost 12% since Nike's fiscal fourth-quarter earnings report in late June, where it beat analysts' expectations. Jefferies said in a recent note that Nike is just starting to hit its stride. Inventory and supply chains are beginning to stabilize and that should lead the stock higher, according to analyst Randal Konik. "Supported by a growing appreciation for health and wellness and casual lifestyles, NKE's business and brand are strengthening globally, and we expect that the company's continued emphasis on digital should lead to share gains ahead," the analyst wrote. Demand remains strong as well, Konik noted, even as North American sales are down slightly. Meanwhile, while many companies are seeing FX headwinds, Jefferies says its base case is that Nike will be a key beneficiary of a stronger dollar over the next 12 months. "Despite Covid issues impacting all companies, NKE is executing well, and we believe the stock multiple has room to expand," Konik said. Pool Corp The pool supply and outdoor living company is coming off a mostly mixed earnings report last quarter, but investment firm Goldman Sachs says the stock just isn't getting enough credit. Analyst Susan Maklari wrote in a recent earnings follow up note to clients that Pool is "executing against a moderating macro." "We maintain our favorable view on POOL following 2Q results as we look for its strategy along with meaningful cash generation to drive EPS against an uncertain macro backdrop," she added. The analyst also says Pool Corp is a beneficiary of rapid inflation, giving it plenty of pricing power well into 2023. In addition, Maklari called Pool's revenue outlook "favorable" as sales remain robust in many of the company's year-round markets. "Moreover, with 80% of revenues driven by maintenance and repair, we believe POOL is well positioned to deliver growth off the current base despite a slower economic environment," she said. Construction backlogs are easing, too, she noted and supply chain normalization is well underway. Goldman said this year's selloff is overdone and that investors should buy the stock now. Shares of Pool Corp. are down almost 37% so far in 2022. Autoliv The auto safety supplier is firing on all cylinders, Mizuho analyst Vijay Rakesh said last week. Shares are up 20% this month and Autoliv is coming off a very strong second-quarter earnings report on July 22. Rakesh acknowledged that supply chains have been an issue but it looks like that's beginning to moderate. "ALV noted tailwinds with pricing, and a better 2H auto LVP (light vehicle production) rebound as supply chains re-open post-Covid shutdowns," he said. The macroeconomy is a risk, Rakesh wrote, but investors should remain calm as headwinds from rising costs may have peaked. "While many raw materials remain elevated vs. prepandemic levels, we believe some commodities have started to soften, with pricing potentially having peaked, which could be a tailwind to better gross margins," he wrote. All told, Rakesh says Autoliv is well positioned for a big finish to 2022. "We see ALV continuing to execute well, with recent price increases supporting stronger LVP outperformance in a tough environment in the near-term, with wins in EV driving better content gains," Nike- Jefferies, Buy rating "Supported by a growing appreciation for health and wellness and casual lifestyles, NKE's business and brand are strengthening globally, and we expect that the company's continued emphasis on digital should lead to share gains ahead. ... .U.S. stocks are trading definitively lower Tuesday as softer macro and micro data points are weighing on consumer and Tech stocks and amplifying the unfavorable growth/inflation mix for risk assets." Pool Corp.- Goldman Sachs, Buy rating "We maintain our favorable view on POOL following 2Q results as we look for its strategy along with meaningful cash generation to drive EPS against an uncertain macro backdrop. ... .Revenue Outlook Remains Favorable. ... .Moreover, with 80% of revenues driven by maintenance and repair, we believe POOL is well positioned to deliver growth off the current base despite a slower economic environment." Citizens Financial- Baird, Outperform rating "Remain buyers on weakness. ... .CFG continues to execute well, risk/reward attractive. ... .CFG reported operating Q222 EPS of $1.14, ahead of the $0.83 consensus, $0.96 Baird.. ... .CFG should not be overlooked as a future M & A target if industry consolidation picks up; in a low/no-premium transaction, we think larger regional peers with Northeastern exposure would be interested in combining." McDonald's- Cowen, Outperform rating "MCD beat 2Q EPS, aided by better than expected same store sales across all 3 segments. We find this encouraging given investor concerns on the state of the U.S. & European lower income consumer. While EPS flow-thru was restrained by Russia/Ukraine dynamics & higher SG & A, MCD represents an appealing defensive play that is executing." Autoliv- Mizho, Buy rating "ALV noted tailwinds with pricing, & a better 2H auto LVP rebound as supply chains re-open post-Covid shutdowns. .. .While many raw materials remain elevated vs. prepandemic levels , we believe some commodities have started to soften, with pricing potentially having peaked, which could be a tailwind to better GMs. ... .We see ALV continuing to execute well, with recent price increases supporting stronger LVP outperformance in a tough environment in the near-term, with wins in EV driving better content gains."

Customers at a McDonald's restaurant

Scott Mlyn | CNBC

There's a whole bunch of companies that are firing on all cylinders and well-positioned going into the third quarter and second half, according to Wall Street analysts.

These stocks also offer defensive potential, analysts say, particularly if the macro environment worsens.

Of the nearly 300 companies in the S&P 500 that have so far reported their latest quarter's earnings, almost 78% topped analyst expectations, according to Refinitiv.

CNBC Pro combed through top Wall Street research to find companies that analysts believe are continuing to execute well following those earnings.

They include: McDonald's, Nike, Citizens Financial, Pool Corp. and Autoliv.

Nike

The global athletic goods retailer hasn't been immune to supply chain challenges, but investment firm Jefferies says that the stock is just too "attractive" to ignore right now.

Shares of the company are up almost 12% since Nike's fiscal fourth-quarter earnings report in late June, where it beat analysts' expectations.

Jefferies said in a recent note that Nike is just starting to hit its stride.

Inventory and supply chains are beginning to stabilize and that should lead the stock higher, according to analyst Randal Konik.

Demand remains strong as well, Konik noted, even as North American sales are down slightly.

Meanwhile, while many companies are seeing FX headwinds, Jefferies says its base case is that Nike will be a key beneficiary of a stronger dollar over the next 12 months.

"Despite Covid issues impacting all companies, NKE is executing well, and we believe the stock multiple has room to expand," Konik said.

Pool Corp

The pool supply and outdoor living company is coming off a mostly mixed earnings report last quarter, but investment firm Goldman Sachs says the stock just isn't getting enough credit.

Analyst Susan Maklari wrote in a recent earnings follow up note to clients that Pool is "executing against a moderating macro."

"We maintain our favorable view on POOL following 2Q results as we look for its strategy along with meaningful cash generation to drive EPS against an uncertain macro backdrop," she added.

The analyst also says Pool Corp is a beneficiary of rapid inflation, giving it plenty of pricing power well into 2023.

In addition, Maklari called Pool's revenue outlook "favorable" as sales remain robust in many of the company's year-round markets.

"Moreover, with 80% of revenues driven by maintenance and repair, we believe POOL is well positioned to deliver growth off the current base despite a slower economic environment," she said.

Construction backlogs are easing, too, she noted and supply chain normalization is well underway.

Goldman said this year's selloff is overdone and that investors should buy the stock now.

Shares of Pool Corp. are down almost 37% so far in 2022.

Autoliv

The auto safety supplier is firing on all cylinders, Mizuho analyst Vijay Rakesh said last week.

Shares are up 20% this month and Autoliv is coming off a very strong second-quarter earnings report on July 22.

Rakesh acknowledged that supply chains have been an issue but it looks like that's beginning to moderate.

"ALV noted tailwinds with pricing, and a better 2H auto LVP (light vehicle production) rebound as supply chains re-open post-Covid shutdowns," he said.

The macroeconomy is a risk, Rakesh wrote, but investors should remain calm as headwinds from rising costs may have peaked.

"While many raw materials remain elevated vs. prepandemic levels, we believe some commodities have started to soften, with pricing potentially having peaked, which could be a tailwind to better gross margins," he wrote.

All told, Rakesh says Autoliv is well positioned for a big finish to 2022.

"We see ALV continuing to execute well, with recent price increases supporting stronger LVP outperformance in a tough environment in the near-term, with wins in EV driving better content gains,"

Nike- Jefferies, Buy rating

"Supported by a growing appreciation for health and wellness and casual lifestyles, NKE's business and brand are strengthening globally, and we expect that the company's continued emphasis on digital should lead to share gains ahead. ... .U.S. stocks are trading definitively lower Tuesday as softer macro and micro data points are weighing on consumer and Tech stocks and amplifying the unfavorable growth/inflation mix for risk assets."

Pool Corp.- Goldman Sachs, Buy rating

"We maintain our favorable view on POOL following 2Q results as we look for its strategy along with meaningful cash generation to drive EPS against an uncertain macro backdrop. ... .Revenue Outlook Remains Favorable. ... .Moreover, with 80% of revenues driven by maintenance and repair, we believe POOL is well positioned to deliver growth off the current base despite a slower economic environment."

Citizens Financial- Baird, Outperform rating

"Remain buyers on weakness. ... .CFG continues to execute well, risk/reward attractive. ... .CFG reported operating Q222 EPS of $1.14, ahead of the $0.83 consensus, $0.96 Baird.. ... .CFG should not be overlooked as a future M&A target if industry consolidation picks up; in a low/no-premium transaction, we think larger regional peers with Northeastern exposure would be interested in combining."

McDonald's- Cowen, Outperform rating

"MCD beat 2Q EPS, aided by better than expected same store sales across all 3 segments. We find this encouraging given investor concerns on the state of the U.S. & European lower income consumer. While EPS flow-thru was restrained by Russia/Ukraine dynamics & higher SG&A, MCD represents an appealing defensive play that is executing."

Autoliv- Mizho, Buy rating

"ALV noted tailwinds with pricing, & a better 2H auto LVP rebound as supply chains re-open post-Covid shutdowns. .. .While many raw materials remain elevated vs. prepandemic levels , we believe some commodities have started to soften, with pricing potentially having peaked, which could be a tailwind to better GMs. ... .We see ALV continuing to execute well, with recent price increases supporting stronger LVP outperformance in a tough environment in the near-term, with wins in EV driving better content gains."

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