RBC’s Jonathan Golub and team argue that Brexit has killed the value trade–and urges investors to consider “Stable Growers”–stocks that have earnings growth, pay dividends, and low dispersion of analyst estimates–including MasterCard (MA), Johnson & Johnson (JNJ), United Parcel Service (UPS), Verizon (VZ), and Phillip Morris (PM). They explain why:
We believe that the outperformance of low-P/E stocks that characterized the market in the first half of 2016 is now behind us, and that Stable Growers will re-assert their leadership…In the past, we have made the case for extending portfolio risk during periods of heightened volatility. While there will be opportunities to re-allocate portfolios as the result of current turmoil, we believe that investing on this dip will result in only modest upside given the limited pullback that has occurred thus far.
Here’s Golub’s list of 50 Stable Growers that he argues will outperform in a post-Brexit world:
Shares of MasterCard have dropped 2.1% to $89.51 at 10:51 a.m. today, while Johnson & Johnson has dipped 0.3% to $115.27, United Parcel Service has fallen 1.6% to $102.70, Verizon has gained 0.6% to $54.74, and Phillip Morris has ticked up 0.2% to $97.87.