It’s time to look at quality stocks and earnings growth, rather than traditional defenses, to deal with greater volatility in the future, according to BMO Capital. The market is emerging from its worst day since June 2020, as the S&P 500 fell more than 4% on Tuesday on the back of hotter-than-expected US inflation data. Stocks have been under pressure throughout the year as fears of rising inflation, rising interest rates and economic stagnation prompted traders to dump stocks. Those holding on to stocks are turning more to defensive sectors, such as consumer staples and utilities, to counteract the uncertainty. However, BMO Capital has some other recommendations for investors to protect and grow their investment portfolios. “[We] I think there are better ways to combat price volatility and volatility than to hoard it in defense,” BMO Capital’s Brian Belsky wrote in a note on Tuesday. In fact, we prefer to focus on high quality and earnings growth, which have historically posted strong returns during high levels of volatility, and have done a better job of providing downside protection during market dips, while also participating in the upside of prices.” S&P 500 Index more than 10% year on year, high quality and BMO earnings growth screens are down 6.4% and 1.1%, respectively.In comparison, consumer goods and utilities are down 9.7% over the same period.Over the time period, the broader market has declined by 21.4% on average, according to the note. At the same time, these stocks have essential qualities that consistently attract E for long-term growth, according to the company. “High quality and dividend growth show higher return on equity, better dividend growth in minimum time, and better growth in dividends over time. superior in earnings on both the forward and backside basis when compared to their defensive counterparts, characteristics we believe are important when it comes to long-term performance consistency,” read the note. BMO screened for high-quality stocks in the S&P 50 0 with low levels of earnings per share growth volatility compared to the broader market, high levels of cash and a strong return on equity. The company also looked for stocks that have a dividend yield above the benchmark and no dividend cuts over the past five years. Here are 10 top quality, earnings growth names. Costco is a high-quality pick that has outperformed this year, down just 10%, compared to a 17% drop in the S&P 500. The retail stock is up 6.6% this quarter. The high-quality Texas Instruments name is down about 12% this year. Semiconductor stocks also outperformed the broader market this quarter, up 7.4% in the time. ConocoPhillips is the earnings growth pick highlighted by BMO. Energy stocks are up 60% this year on the back of higher oil and gas prices, and are up 29% this quarter alone. Other names on this list are Microsoft, Cognizant Technology, Discover Financial Services, and TJX Companies.