Soft landing or recession? 3 share ideas to navigate uncertainty in the US economy

So far, the most anticipated recession in recent history has yet to materialise in the United States.

Recent data has fuelled hope that The Federal Reserve (Fed) can continue to lower inflation without crashing the economy. But this outcome is far from certain. Potential sources of turbulence include inflationary pressure from food and energy prices, and a faltering Chinese economy.

This article isn't personal advice. If you're not sure an investment is right for you, seek advice. Investments and any income from them will rise and fall in value, so you could get back less than you invest. Past performance is not a guide to the future. Ratios shouldn't be looked at on their own.

Investing in an individual company isn't right for everyone because if that company fails, you could lose your whole investment. If you cannot afford this, investing in a single company might not be right for you. You should make sure you understand the companies you're investing in and their specific risks. You should also make sure any shares you own are part of a diversified portfolio.

Remember, before you can trade US shares, you need to complete and return a W-8BEN form.

Amazon – Intelligent soft-landing option?

Amazon's riding high on hopes that the huge levels of investment currently being ploughed into artificial intelligence (AI), will remain a longer-term megatrend.

While we might think of Amazon as the box shifter that delivers parcels to our doors, its cloud business is the biggest profit generator.

The surge in AI interest is an exciting opportunity for the world's biggest cloud platform, and management is pushing hard for the company to expand its offering in the space.

Meanwhile, the North American retail business reported solid second quarter growth this month. We think this division is a prime candidate to benefit if the US economy manages to avoid a recession.

Amazon has certainly caught investors' attention this year, but a price to earnings multiple of 50x brings extra pressure to deliver growth.

Amazon.com Inc

Sell: 146.72 | Buy: 146.73 1.01 (-0.68%)

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Anglo American – strength in diversity

Investors already seem to be pessimistic about the outlook for mining stocks like Anglo American. Woes in the Chinese economy could certainly create further headwinds for industrial commodities like iron ore and coal.

But Anglo has plenty of other strings to its bow. Its Quellaveco copper mine is starting to deliver and we're supportive of growing the profile in metals that support the energy transition - copper is one of those.

We're also excited about the potential for the Woodsmith project. This could give a fresh avenue into crop nutrients, an area that could be a driver towards strong long-term growth.

Anglo hasn't escaped the recent sell-off in the sector and has promised a significant step up in production over the second half of this year. That offers opportunity, but also the potential for uncertainty and volatility if increased output doesn't materialise.

Anglo American

Sell: 2,197.50 | Buy: 2,198.50 6.50 (-0.29%)

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Baker Hughes – Energy technology for today and tomorrow

Baker Hughes is one of the world's largest oil field service companies. That side of the business saw 20% revenue growth in the second quarter, driven by a strong uptick in offshore activity by oil & gas companies.

If oil prices continue to strengthen, this trend could accelerate. However, it did note some headwinds in North America, and we are mindful the ongoing slowdown in activity in areas like Texas and the Permian basin is a risk.

Its Industrial & Energy Technology (IET) division enjoyed even faster growth, benefiting from strong momentum in new energy technologies such as hydrogen and blue ammonia.

New energy is a key focus, which we think could be a growth opportunity to potentially mitigate dips in the oil price. Liquified natural gas is another area of Baker Hughes' expertise, and a fuel that's seen as an important part of the energy transition.

Baker Hughes has been growing earnings faster than its similar sized competitors and would appear well placed to continue this trend. That's attracted a valuation towards the top of the pack, so there's little room for disappointment.

Baker Hughes Company

Sell: 34.08 | Buy: 34.09 0.12 (0.35%)

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Unless otherwise stated, estimates are a consensus of analyst forecasts provided by Refinitiv. These estimates aren't a reliable indicator of future performance. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our non-independent research disclosure for more information.

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