Morgans is urging investors to buy these 2 ASX 200 shares for this challenging environment

A top broker says these two ASX 200 shares will do well in this volatile climate.

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A female broker in a red jacket whispers in the ear of a man who has a surprised look on his face as she explains which two ASX 200 shares should do well in today's volatile climate

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Key points

  • The market volatility is unlikely to abate as the outlook for ASX 200 shares remains highly unpredictable
  • In this environment, Morgans is increasing its holdings in two ASX 200 shares for its model portfolio
  • The two shares are Lottery Corporation and Woodside Energy 

Don’t be fooled into thinking the good times are back with today’s market bounce. But a top broker reckons there are two ASX 200 shares that will do well in this volatile climate.

The S&P/ASX 200 Index (ASX: XJO) is rallying over 1% in midday trading. This marks the first time that the index is gaining ground in the last eight trading sessions!

Given that the headwinds hitting global equity markets are still in play, it is probably too early to call the bounce a turning point.

Two ASX 200 shares to weather the storm

Nonetheless, there are two ASX 200 shares that Morgans has bought more of for its core model portfolio.

Never mind the fact that the outlook for shares is still highly uncertain across capital markets. Investors are still on edge with the faster-than-expected interest rate hikes and geopolitical conflict.

Sentiment has been made worse by the crypto bear market that’s dragging on risk assets here and around the world.

Fundamentals look better than sentiment

Morgans is telling investors not to get too caught up in the negativity.

The broker explained:

We think investors can take comfort that recent volatility looks disconnected from strong corporate fundamentals and a solid outlook for the Australian economy.

Betting on this ASX 200 share

On the back of this belief, Morgans has increased its holdings in Lottery Corporation Ltd (ASX: TLC) in its equities-only model portfolio.

The key objective of this portfolio is to beat the ASX 200 Accumulation Index. It aims to do this with a balance of income (dividend) returns and capital growth.

To that end, the Lottery Corporation ticks the boxes. The company demerged from Tabcorp Holdings Limited (ASX: TAH) last month.

The broker said:

TLC is one of the highest performing lotteries businesses in the world, with long duration and exclusive licences to operate lotteries all over Australia (except for WA).

Filling up on Woodside shares

Another ASX 200 share that Morgans has upped its holdings of is Woodside Energy Group Ltd (ASX: WDS).

Morgans explained:

This was a conscious decision to lift our energy sector exposure, partially as a hedge against the inflationary forces affecting other parts of the portfolio, and because WDS looks abnormally cheap post de-merger.

How cheap is cheap?

Well, the broker noted that the Woodside share price trades at a significant discount to its US peers. It’s also sitting at around a 7% dividend yield.

Even in a rising interest rate environment, that represents a relatively attractive yield.

Motley Fool contributor Brendon Lau has positions in Woodside Petroleum Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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