5 US stocks to watch amid recession worries

Highlights:

• Host Hotels & Resorts (HST) revenue jumped nearly 41 per cent YoY in Q3 FY22.
• The net income of Targa Resources, Inc. (TRGP) slumped three per cent YoY in Q3 FY22.
• The PNW stock grew around eight per cent YTD.

The recession has been one of investors' main concerns so far in recent months, with the US economy shrinking for the starting two quarters of the year. Inflation has been the main reason the Federal Reserve had to raise the interest rates at their highest pace in years to cool down the demands.

The hawkish stance has raised concern over a potential recession in the economy. Although there is no specific definition of a recession, some believe that two consecutive quarters of economic decline suggest a recessionary period.

However, some also argued that the definition doesn't imply every time, while the latest GDP data also padded support to the belief.

Amid recession concerns, we discuss five stocks, including Host Hotels & Resorts, Inc. (NASDAQ:HST), Targa Resources, Inc. (NYSE:TRGP), Apartment Investment and Management Company (NYSE:AIV), Pinnacle West Capital Corporation (NYSE:PNW), and Iron Mountain Incorporated (NYSE:IRM).

Host Hotels & Resorts, Inc. (NASDAQ:HST)

As the name suggests, Host Hotels & Resorts is a REIT firm with a dividend yield of 2.64 per cent. The stock of the REIT firm, which primarily invests in the hotel and other leisure properties, added over seven per cent YTD and about 13 per cent YoY.

The company has recently been in the news after it announced to acquire the fee simple interest in the Four Seasons Resort and Residences Jackson Hole for around US$ 315 million in cash. The Four Seasons Resort and Residences Jackson Hole is a 125-room luxury resourt in Wyoming.

Meanwhile, Host Hotels & Resorts Inc's revenue surged 40.9 per cent YoY to US$ 1.18 billion in Q3 FY22, and its net income was US$ 116 million, against a loss of US$ 120 million in the year-ago quarter.

Targa Resources, Inc. (NYSE:TRGP)

The midstream energy infrastructure firm, Targa Resources Inc holds a dividend yield of 1.94 per cent. The energy company's stock, which has the infrastructure to deliver natural gas and natural gas liquids, soared 41 per cent YTD and around 36 per cent YoY.

The energy companies have benefited due to the higher oil prices this year, and the TRGP stock gained over 22 per cent in the quarter through November 30.

The company announced a quarterly cash dividend of US$ 0.35 apiece, or US$ 1.40 per share on an annual basis, for Q3 FY22. Meanwhile, in Q3 FY22, Targa Resources Inc's revenue rose 20 per cent YoY to US$ 5.36 billion, and its net income fell three per cent YoY to US$ 279.3 million.

Apartment Investment and Management Company (NYSE:AIV)

Another REIT firm, Apartment Investment and Management Company, holds a market cap of US$ 1.22 billion. The firm's stock, which claims to own several apartment communities properties, rose around five per cent YTD and around six per cent YoY.

Apartment Investment and Management Company's revenue was US$ 47.68 million in Q3 FY22, and its net income was US$ 34.17 million, against a net loss of US$ 4.84 million on revenue of US$ 42.89 million in Q3 FY21.

Pinnacle West Capital Corporation (NYSE:PNW)

Pinnacle West Capital is a utility holding firm with a dividend yield of 4.52 per cent. The stock of the Phoenix-based utility firm, which focuses on developing low-carbon economies, grew eight per cent YTD and around 15 per cent YoY.

Investors typically explore opportunities in utility companies, as their demands tend to remain stable even during an economic downturn or a recessionary period.

Meanwhile, in Q3 FY22, Pinnacle West Capital Corporation's operating revenue was US$ 1.46 billion, against US$ 1.3 billion in Q3 FY21. The net income of the electric utility holding firm was US$ 330.63 million in the quarter, down from US$ 344.1 million in Q3 FY21.

Iron Mountain Incorporated (NYSE:IRM)

The REIT and enterprise information management firm, Iron Mountain Incorporated holds a dividend yield of 4.64 per cent. The company's stock, which offers solutions for records management, data backup, data centers, and other related services, surged about three per cent YTD and around 15 per cent YoY.

Iron Mountain Incorporated's revenue grew 14 per cent YoY to US$ 1.28 billion in Q3 FY22, and its net income was US$ 193 million, against US$ 68 million in the preceding year's same quarter.

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Bottom line:

The government said on Wednesday, November 30, that the US economy expanded at a 2.9 per cent annual rate from July through September, despite high interest rates and ongoing inflation.The inflation data for October showed that it has cooled and came in at its lowest level in 2022. It also suggested that Fed's hawkish drive has brought down the soaring costs.

But on the other hand, the increased borrowing costs have weighed on the consumers' wallets and the businesses. The latest sign which suggests that the economy might tip into a recession next year is the layoff news from the corporations.

Companies like Amazon.com, Inc. (NASDAQ:AMZN) and FedEx Corporation (NYSE: FDX) have announced that they are preparing to lay off around ten thousand people from their overall workforce.

However, despite the strong gains in the S&P 500 index over the past few years, the index was down close to 17 per cent in 2022 and about 15 per cent in the trailing 12 months.

So, as volatility is an integral part of the market, investors should not panic about the recession or the market, but making savvy and diversified investment planning is a must to avoid the hurdles.