In 2022, the broader economy was still recovering from its COVID hangover, the U.S. experienced its highest inflation levels in decades, the Fed raised rates rapidly, and geopolitical concerns involving Russia and China raised their ugly heads. With these headlines, it is easy to see why investors would be discouraged and think picking stocks is futile.

Chadd Garcia, the Ave Maria Focused Fund portfolio manager, joined 7investing lead advisor Matthew Cochrane to discuss how to invest in stocks profitably through economic downturns. Garcia is a CFA charter holder with an MBA from Harvard Business School. At the Ave Maria Focused Fund, Garcia seeks to invest in companies with durable, forecastable, and growing earnings.

Against 2022’s ugly macro backdrop, Garcia believes if he focuses on companies with the right characteristics, he will eventually be rewarded by the market. Garcia then walks through some of the top positions in his portfolio to prove his point.

Chemed Corp (NYSE:CHE) operates two very different business segments: hospice services for the dying and plumbing services. No matter how bad a recession hits the economy, both services will still be necessary through any downturn.

In a recession, new car sales may go down. If consumers own cars longer, then at some point, they will switch from a dealer servicing their vehicle when their maintenance program expires and will move to a quick lube operation, which offers much cheaper services than dealers. Valvoline (NYSE:VVV) is the best company in the quick lube space.

Green Plains (NASDAQ:GPRE) is an ethanol producer amidst changing its manufacturing process, which will dramatically increase the value of one of the by-products of its ethanol manufacturing. No matter what happens in the broader economy, this change will occur, a by-product used in the animal nutrition industry.

Garcia and Cochrane then dive deep into one of the fund’s more significant holdings, DigitalBridge Group (NYSE:DBRG). DigitalBridge is an alternative asset manager that invests in digital infrastructure assets through various funds using raised capital. Garcia makes a case for why DigitalBridge has one of the most talented teams in the digital infrastructure space and why it should be able to succeed in a growing sector.

Finally, Cochrane asks Garcia about Ave Maria’s morally responsible investing mandate, which incorporates guidance from U.S. bishops to create a fund for Catholics to invest in without violating their religious beliefs.

It’s a fascinating discussion, touching on various topics and companies. Be sure to listen!