Slowing growth in China and plunging oil prices, among other factors, have rekindled fears that the U.S. may be poised to enter another recession.
Although most forecasters think such a downturn is unlikely this year, they're hedging their bets by advising investors on what they can do to guard against that risk.
First, Goldman Sachs (GS) chief U.S. equity analyst David Kostin wrote in a recent research note, look for companies that either benefit from strong balance sheets or get the bulk of their revenue from the U.S. A strong balance sheet would help corporations weather tighter financial conditions, while those dependent on U.S. sales wouldn't be as hurt as badly from the strengthening dollar.
While many on Wall Street believe another recession is a long shot, Bank of America analysts are now pegging the chances at 20 percent, up from 15 percent previously. Citi Research analysts are even more pessimistic, last month putting the probability of the U.S. economy sliding into recession in 2016 at 65 percent.
"Despite the generally positive U.S. economic data, the sudden fall in asset prices has investors focused on the potential for a U.S. recession," Kostin wrote in his report, which was issued on Friday. "Clients understandably point to the stock market as a cause for concern, and wonder what the market has come to know in early 2016 that they do not."
Even though it's unnerving to sit through large market corrections, there's not much of a link between stock market performance and the economy, according to Ian Shepherdson of Pantheon Macroeconomics. While the stock market can affect consumer behavior -- a bear market might prompt some investors to tighten their belts -- in the U.S. a stronger indicator is the job market, which has been improving.
"The labor market captures the overall state of the macro economy, and right now it shows no signs at all of weakening, and every sign that wages will accelerate markedly," he wrote.
Goldman, for its part, says it's "unlikely" that the economy will enter a recession this year, and predicts that the S&P 500 will regain lost ground and end the year at 2,100, up from today's level of 1,890.
"Our economists expect that U.S. GDP will grow at 2 percent this year as the Fed hikes rates four times," Kostin noted. "They estimate that risks to the US economy from a further slowdown in China are limited, and that the negative effects of lower oil prices will be offset by benefits to the consumer."
Regardless, some investors remain haunted by the specter of a recession, and Kostin has some stock picks to help recession-proof their portfolios. Among the companies that fit the strong balance sheet profile are Facebook (FB) and Alphabet (GOOGL), two of the so-called "FANG" stocks (for Facebook, Amazon, Netflix and Google) that performed well in 2015.
Other strong balance sheet picks are Starbucks (SBUX) and Chipotle (CMG), which made the cut despite its recent outbreaks. Companies dependent on U.S. sales include Paychex (PAYX), Wells Fargo (WFC) and Aetna (AET).