These companies are more resilient. Retail investors who want to avoid volatility can buy stocks that perform well despite market uncertainty. Investors can choose stocks that are more resilient, says Shawn Cruz, manager of trader…
These companies are more resilient.
Retail investors who want to avoid volatility can buy stocks that perform well despite market uncertainty. Investors can choose stocks that are more resilient, says Shawn Cruz, manager of trader strategy at TD Ameritrade, an Omaha, Nebraska-based brokerage company. “Consumer staple companies, such as General Mills (ticker: GIS), Procter & Gamble Co. (PG), Altria Group (MO) and Kellogg Co. (K), sell items you are going to buy no matter what the economy is doing,” he says. The utilities sector is also less exposed to changes in the market or geopolitical issues, he says. Here are seven stocks that are less affected by volatility.
GPC, an automotive replacement parts seller, has increased its dividend for more than 60 consecutive years. GPC tends to be more recession proof, since consumers now keep their cars longer, says Robert Johnson, a finance professor at Nebraska’s Creighton University. The stock is selling for $100 per share and a forward price-earnings ratio of 16.6. The Atlanta-based company has increased 7 percent in value over the past year and carries a forward dividend yield of 2.9 percent, which is slightly higher the 10-year Treasury yield. “This is one stock that an investor can simply put in their portfolio and hold for the long term,” he says.
Based in Minneapolis, General Mills manufactures and markets branded-consumer foods such as Cocoa Puffs, Lucky Charms and Yoplait. It sells near its 52-week lows. With a strong dividend yield of 5.2 percent, nearly double the 10-year Treasury yield, it sells at a below market forward P/E ratio at 10.5. The firm has been out of favor, falling 31 percent in value over the past year, Johnson says. General Mills has a larger margin of safety than many other large-cap stocks, since during tougher economic times consumer-goods stocks tend to perform better compared with other sectors.
Newell Brands is based in New Jersey and designs, manufactures, sources and distributes consumer and commercial products worldwide. NWL offers well-recognized brands, which include Rubbermaid, Yankee Candle, Sharpie, Graco and dozens of others. The stock sells at nearly $23 per share, selling in the middle of its 52-week range. It is out of favor, falling by about 24 percent over the past 52 weeks. “It has recently rallied, as consensus earnings estimates have risen,” Johnson says. “It has a handsome forward dividend yield of 4 percent. Activist investor Carl Icahn recently increased his holdings in Newell Brands.”
Berkshire Hathaway is a conglomerate and its subsidiaries operating in a myriad of industries including insurance, railroads and utilities. It owns companies with well-known brand names, such as Dairy Queen, Fruit of the Loom and See’s Candies. The firm also owns stock and debt in Coca-Cola Co. (KO), Apple (APPL) and Bank of America Corp. (BAC). The company has averaged 20 percent annual returns since its inception, but pays no dividends. “This has historically been very advantageous to investors as Mr. (Warren) Buffett and (his) team have been able to put earnings to productive use,” Johnson says. For the most part, Berkshire invests in businesses that many investors would consider old fashioned, making the company less volatile, he says.
Live Nation, a California-based ticketing, artist and performance giant has excellent management, says Yale Bock, a portfolio manager for Interactive Brokers Asset Management in Boston. The company has excellent prospects for growth, especially internationally, since it is making acquisitions globally and utilizing artificial intelligence, data analytics and blockchain technologies to make the ticketing process more efficient. “The higher spend rate at concerts by fans who buy souvenirs, special packages, better food and beverages has helped margins and continue to attract high-margin advertisers,” he says. “The millennial generation is attracted to experiences and Live Nation may be the ultimate experience stock. “
With the merger of QVC and HSN about a year in, combined with zulily, an online clothing, toys and home products retailer, the company is very efficient, Bock says. The company’s efforts to expand its audience on media streaming platforms, such as Hulu, Roku, YouTube and Facebook Live, is working to grow younger users. “The supply chain and efficiencies in that area to consolidate among the three different business should start to take hold and help margins,” he says. While growth in the business is not fast, it will become even more efficient, “allowing QVC to buy back stock and benefit from by being tax efficient with their balance sheet moves.”
Utilities are defensive moves for investors, especially amid uncertainty with the tariffs, says Mike Loewengart, vice president of investment strategy at New York-based E-Trade Financial (ETFC). “Renewable energy stocks are likely on investors’ radars as countries around the world are looking to have environmentally conscious resources,” he says. “While this sector has taken a hit lately, stocks like Pacific Ethanol could be a good example.” PEIX’s stock reached a new 52-week low recently. The company has nine biorefineries with a combined operating capacity of 605 million gallons annually of fuel grade ethanol and alcohol products. In July 2017, the company acquired Illinois Corn Processing for $76 million.
These 7 retail stocks should be resilient.
To review, these consumer-goods stocks should weather a volatile market: