JPMORGAN'S TOM LEE: These Are The 15 Best Stocks For A Market Sell-Off

JP Morgan's Tom Lee

Photo: Bloomberg Television

Stocks are within a few points of their all-time highs.  However there are a few signs that the market’s bull run could soon hit a few bumps.In his latest research note, JP Morgan’s Tom Lee says he is remaining cautious on stocks due to higher taxes, rising gas prices and the sequestration budget cuts.

Lee has put together 15 stocks that could leave investors insulated to any oncoming volatility. Here’s what makes them unique.

“Interestingly, in the last 11 5%- pullbacks since 2009, this group of 15 stocks outperformed the S&P 500 8 of the 11,” wrote Lee.  “In other words, these names provide exposure to a portfolio of US stocks that could be seen as relatively safe, even in the anticipation of a pullback.”

The screening criteria: less than 15 months of both a) negative monthly absolute performance, and b) relative monthly underperformance (vs SPX) of more than 150bps. And, the largest monthly relative underperformance (since 2009) is no greater than 8 per cent.

Dentsply International

Ticker: XRAY

Implied upside (downside): NA

Largest monthly underperformance:
-6.5 per cent

Industry: Health care supplies

Description: Dentsply just raised its dividend by 13.6 per cent.

Source: JPM

Loews Corp.

Ticker: L

Implied upside (downside): NA

Largest monthly underperformance:
-7.4 per cent

Industry: Insurance

Description: Loews stock just hit a 52-week high.

Source: JPM

3M

Ticker: MMM

Implied upside (downside): (8 per cent)

Largest monthly underperformance:
-6.6 per cent

Industry: Finshed products conglomerate

Description: 3M shares are up 17 per cent since December.

Source: JPM

IBM

Ticker: IBM

Implied upside (downside): (7 per cent)

Largest monthly underperformance:
-5.2 per cent

Industry: IT consulting and other services

Description: IBM has increased its dividend each of the past 17 years.

Source: JPM

Genuine Parts Co.

Ticker: GPC

Implied upside (downside): (5 per cent)

Largest monthly underperformance:
-7.5 per cent

Industry: Distributor

Description: Genuine just beat out Entergy to become the 290th-largest company on the S&P.

Source: JPM

Sigma-Aldrich Corp.

Ticker: SIAL

Implied upside (downside): (3 per cent)

Largest monthly underperformance:
-7.9 per cent

Industry: Specialty chemicals

Description: Sigma-Aldrich shares recently hit a 52-week high.

Source: JPM

Paychex

Ticker: PAYX

Implied upside (downside): 0

Largest monthly underperformance:
-7.8 per cent

Industry: Data processing

Description: Paychex' most recent earnings improved 4.9 per cent YOY.

Source: JPM

Fiserv

Ticker: FISV

Implied upside (downside): 0

Largest monthly underperformance:
-7.0 per cent

Industry: Data processing

Description: Fiserv's most sales came in - 0.4% lower than the prior-year quarter's $1.16 billion.

Source: JPM

Praxair

Ticker: PX

Implied upside (downside): 1 per cent

Largest monthly underperformance:
-7.2 per cent

Industry: Industrial gases

Description: Despite recent acquisitions, Praxair's after-tax profit increased by just 2.6% in 2012.

Source: JPM

PPG Industries

Ticker: PPG

Implied upside (downside): 3 per cent

Largest monthly underperformance:
-5.7 per cent

Industry: Diversified chemicals

Description: PPG just sold off its commodity chemicals business.

Source: JPM

Sysco

Ticker: SYY

Implied upside (downside): 4 per cent

Largest monthly underperformance:
-7.8 per cent

Industry: Food distributors

Description: Sysco stock just hit a 52-week high.

Source: JPM

United Technologies

Ticker: UTX

Implied upside (downside): 5 per cent

Largest monthly underperformance:
-5.4 per cent

Industry: Aerospace and defence

Description: Citi just upgraded UTX to 'buy.'

Source: JPM

ConAgra

Ticker: CAG

Implied upside (downside): 6 per cent

Largest monthly underperformance:
-7.1 per cent

Industry: Packaged foods and meats

Description: ConAgra just inked a deal with Cargill and CHS to merge flour mill operations.

Source: JPM

Union Pacific

Ticker: UNP

Implied upside (downside): 10 per cent

Largest monthly underperformance:
-7.1 per cent

Industry: Rail

Description: Union Pacific shares hit a 52-week high last month.

Source: JPM

Disney

Ticker: DIS

Implied upside (downside): 10 per cent

Largest monthly underperformance:
-7.9 per cent

Industry: Media and retail

Description: Disney's executive compensation plan was just reapproved by shareholders.

Source: JPM

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