Steven Glass, managing director at Pella Funds Management, says the recession is underway, inflation is likely to persist and it is “important” for investors to look at valuations now. “There are a lot of bearish signs. I mean, this upside is huge. I don’t think people realized how 2-10 years the upside is.” [Treasury yield] At this point in time, that’s actually historically a strong signal of an impending recession,” Glass told “Squawk Box Asia” on Monday. Against this backdrop, he urged investors to be “over-cautious about valuations.” advised. This is not the same, he said, as simply buying prices, or selecting firms that trade at low multiples. Rather, investors should buy stocks at low multiples relative to their growth outlook, Glass said.” Evaluation… has never been more important. It’s only important at the moment,” he said. “We’ve gone through an extended period where valuations didn’t matter. Things were traded at crazy multiples of revenue. And if you bought on the momentum, you did really well.” Glass warned that valuations would go down if earnings slump and interest rates keep rising. In this environment, Glass selected nine stocks. “Look especially cheap given their growth outlook,” he said. These include Alphabet, BMW, US healthcare firm Cigna, UK sports fashion retailer JD Sports Fashion, Hong Kong-listed Ping An Insurance and French construction firm Vinci. Discount retailers are also major beneficiaries of a potential recession and ongoing inflation, said Glass, who will continue to trade down to consumers. His favorites are major U.S. discount retailer Dollar General, investment company 3i whose biggest assets are European discount retailer Action & B. & M is value retail.. Glass says Dollar General is one because it is “recession and inflation resistant” – with strong same-store sales growth during the 2008 global financial crisis and the Covid pandemic. On 3i, he said that action accounts for 50% of its investment portfolio, and the discount retailer is a “beneficiary of the rich-poor divide” and consumer trading. He also said the action is “recession and inflation resistant,” with an attractive valuation at more than a 20% discount to its net asset value.