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Jacob: S and P 500 is up 20% year to date with a whole lot of risk out there. What stocks should you be buying now. You're going to want to hear what are two experts recommend? TheStreet's Action Alerts PLUS's portfolio analysts Zev Fima is on tech trends to potential recession, but Hilary Kramer, founder of Kramer Capital Research likes a bunch of value stocks in disguise. Zev, we'll start with you. How can investors find growth if we get a recession?

Zev: So for me it's all about the tech sector. You know, I don't want to be an oil where we can see peak demands in our lifetime. I want tech, which can cut through a macro economic slow down. I think these are secular trends that move to cloud automation, artificial intelligence, inferencing is a big one. So in that sector, you know, we're very bullish on Nvidia. Tech is really the secular sector that I would look to cut through the headwinds of recession.

Jacob: And so nice growth rates there. But Hilary, good old value peakish cycle.

Hilary: Everyone's looking for yield. That's what it really comes down to. And you have these sectors that have been thrown out for dead, like retail. And yes, some retailers are going into bankruptcy and some you don't really want to touch at this point, but companies like Big Lots, big B I G. You get a 5.4% dividend yield and you have high single digit growth. You have Boeing, for example, Boeing, you have 3.8% dividend yield and you have a company that has a hundred points upside and sold a hundred planes to British Airways in Aer Lingus at the Paris Air show and has a lot of potential out there. You have regional banks that are excellent opportunities. We always look at them right now. We've been analyzing first horizon FHB, the bank to own in Hawaii was established 1858. It's the bank and it has a great, great balance sheet, no credit problems, nothing cracking there. And you get there over 5% dude in yield.

Jacob: Real quick, if you get several rate cuts for the next couple of years, Banks rate cuts banks?

Hilary: That definitely right now banks are going to struggle and we've already seen banks start to mention the problem with their net interest margin. So really in this kind of environment where rates are low, you either want these fallen angel, opportunities with great dividend yields, and dividend yields that aren't going to be cut or you want tech because obviously the valuations go up as rates go down. It's just part of the formula of value in a company. So technology is gonna do great as well.

Jacob: Wonderful insight. Thanks to our experts, Hilary Kramer, founder of Kramer Capital Research, and TheStreet's Action Alerts PLUS's portfolio analysis Zev Fima.

The inverted yield curve, the brief move out of value and into growth, and decelerating economic data are pointing to heightened risk of a 2020 recession. 

But aside from buying treasuries -- which have their own risks at present -- what can investors do to find alpha return? 

There is growth tech and there is value. Here's the case for both. 

Growth Tech

"It's all about the tech sector. I don't want to be in oil where we can see peak demand in our lifetime," said Zev Fima, Action Alerts Plus portfolio analyst. "I want tech which can cut through a macro economic slowdown. I think these are secular trends -- the move to cloud, automation, artificial intelligence." He mentioned the AAP trust likes Nvidia (NVDA - Get Report) , which has a high degree of revenue and earnings exposure to the cloud and automation.

The risk with some of these trends? Some of them could see a reduction in expected revenue growth with slowing business spend. But those growth rates are slightly less sensitive to the economic cycle and of course are very high. 

Value and Dividends

It isn't just that some dividend yields out there are nice, or just slightly higher than treasury yields of below 2%. Many companies pay dividends that yield a "juicy" percentage, as some would say, of their share prices. 

"Everyone's looking for yield. You have these sectors that have been thrown out for dead like retail," Hilary Kramer, founder of Kramer Capital Research said. She noted there are some retailers headed for bankruptcy, so big capital losses are not out of the equation for those stocks, but some struggling retailers have seen their shares prices fall so much that their yields are highly attractive. 

Specifically, Kramer likes Big Lots (BIG - Get Report) , which pays a 5.1% dividend yield. She also mentioned its expected revenue growth isn't so low, so there may be some upside for capital gains. analysts also frequently note off-priced retail companies like Big Lots see a sales tailwind when people spend less money during a recession.

Additionally, she mentioned some regional banks like First Horizon Bank (FHB - Get Report) , which pays almost 4%. One risk with banks? Interest rates are either going down slightly in the next year or so or considerably, which hurts banks' net interest margins. 

 

Action Alerts PLUS peek: How Jim Cramer Knew to Sell Shopify Stock Before Its Recent Plunge

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