We recently compiled a list of the 15 Best Stocks to Buy During Recession.In this article, we are going to take a look at where Sempra (NYSE:SRE) stands against the other stocks.
As per BlackRock, 2025 started with a bumpy ride for the US stocks. That being said, the asset manager believes that the sentiment has been a critical driver, but fundamentals seem to be healthy. This makes up for an optimistic longer-run outlook. Despite the tariff shocks creating difficult markets, the firm is constructive in its outlook and opines that volatility is an opportunity to capitalize on stock dispersion. Furthermore, Asia continues to exhibit a diversification opportunity for making investments in the AI theme, with equities providing low correlation to US counterparts.
The trade and tariff uncertainty, which fueled the early-year volatility, advanced at the beginning of Q2 due to the US tariff pronouncements, according to the investment management company. This resulted in a global market meltdown and revived fears related to recession. However, as the quarter progressed, the tariff tensions took a backseat, and there was some optimism visible in the broader US markets. The asset manager believes that, while tariffs remain a critical measure, the potential for market-supporting policies like deregulation and corporate tax cuts provides some room for emergent optimism.
The firm highlighted the importance of an active approach in a bid to capitalize on inefficiencies and to make precise and intentional decisions amidst historic change and transition. While the results of bilateral tariff negotiations remain unpredictable, having a pulse on company dynamics, mainly when the macro picture remains unclear, can act as a differentiator for portfolios.
The firm opines that corporate strength has supported the US equities’ momentum, and it comes through in earnings and market share. As per the firm, relatively pro-industry policies have stimulated healthy FCF. Several companies throughout different time frames have deployed the cash for future business growth. Even though the policy uncertainty in the current time of transition led to the pause in large investment decisions, the company believes that moves toward deregulation and the reshoring of supply chains once policy gets settled can result in the revival of CapEx spending throughout industries, such as technology and industrials. Despite tariffs dominating, the asset manager expects that deregulation and other policy priorities can regain attention. The high drive for innovation is the long-term secular trend that can support the US equities.
To list the 15 Best Stocks to Buy During Recession, we considered the stocks from recession-proof industries such as utilities, consumer defensive, and healthcare. After getting an extensive list of 25-30 stocks, we chose the ones popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiments, as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Sempra (SRE): Among Large-Cap Stocks Insiders Were Buying in Q1 2025 Before Trump’s Tariff Shockwave
A power transmission tower with a desert sunset in the background, symbolizing power and energy.
Number of Hedge Fund Holders: 34
Sempra (NYSE:SRE) operates as an energy infrastructure company. Bank of America Securities analyst Ross Fowler maintained the bullish stance on the company’s stock, giving a “Buy” rating. The analyst’s rating is backed by the company’s strategic decision. On March 31, Sempra (NYSE:SRE) announced that it intends to sell certain energy infrastructure assets in Mexico and a minority stake in Sempra Infrastructure Partners (Sempra Infrastructure). The sales proceeds are expected to be recycled into its 5-year capital campaign, with an emphasis on its U.S. utilities.
As per the analyst, the sale process is anticipated to pivot the company towards a more focused utility growth model, reducing the non-regulated earnings contributions and improving its valuation. Furthermore, despite some challenges, the analyst believes that progress in LNG export marketing efforts is projected to improve its value, justifying the rating. Sempra (NYSE:SRE) operates in markets possessing attractive long-term growth prospects. The industrial and commercial expansion can result in increased energy consumption and infrastructure needs. Also, the transition towards electrification in numerous sectors, such as transportation, can fuel higher demand for Sempra (NYSE:SRE)’s electric utility services.
ClearBridge Investments, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Utilities rose largely on merchant power companies serving the data centers powering AI; the rest of the sector, along with real estate, suffered as rate cut expectations were pushed out. One exception was our holding Sempra (NYSE:SRE) — a well-managed and diversified utility holding company. Sempra possesses large franchises in Texas and California, as well as a large LNG business. Sempra is a leading player in each of its markets and all its segments enjoy robust growth outlooks, which should drive high-single-digit growth for the company overall.”
Overall SRE ranks 15th on our list of the best stocks to buy during recession. While we acknowledge the potential of SRE as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than SRE but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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