With the stock market reaching new highs while so many troubling world events are in progress, the risk of a significant decline is increasing, explains Jim Powell, growth and income specialist and editor of Global Changes & Opportunities Report.
As a result, I think investors in search of new stocks should emphasize all-weather (defensive) companies that will resist a market emergency — and be among the first to recover when it ends.
All-weather stocks are also more likely than others to keep paying their dividends during lean times. Two all-weather stocks this month look particularly attractive.
In my opinion, Kroger Co. (KR) is one of America’s most attractive value stocks. Kroger is undoubtedly familiar to most investors. The company operates over 2,740 food stores in 35 states. In addition to food, the company sells pharmaceuticals, household products, health and beauty products, and even (in most locations) fuel.
Kroger produces many popular foods that it sells under its own brand name. Most of the company’s private label products cost less than the same foods that are available from national brands that advertise heavily.
Judging from Kroger’s sales figures, most of its customers think the company’s private label foods are as good as those produced by its rivals. Kroger’s branded foods are certainly more profitable for the company.
Kroger is also noteworthy for its expanding online business that includes a delivery service. The company has seen triple-digit growth in its online operations since the beginning of 2019 — a period that includes the Covid-19 epidemic and lockdown.
If we get another economic downturn from the Delta variant of the coronavirus — and the public once again chooses to limit its exposure to the disease by staying away from crowded stores — Kroger will be ready to help its customers get what they need.
In times of economic strain it would be logical to think the sale of soft drinks, bottled water, snacks and other non-essential products would decline sharply. It happens that just the opposite is the case.
The tougher conditions become, the more people turn to affordable luxuries that they enjoy. As a result, companies like PepsiCo, Inc. (PEP) have long histories of enduring downturns. In fact, Pepsi has been on a growth track since its founding in 1898.
PepsiCo has a wide range of popular products. The list includes Pepsi-Cola, 7UP, Sierra Mist, Gatorade, Mountain Dew, several fruit drinks, Cheetos, Doritos, Fritos, Capt’n Crunch, cereals, and many similar products it markets worldwide. Many products — especially drinks — are bottled in the countries in which they are sold.
PepsiCo is popular with retailers because deliveries are usually made directly to the stores that sell its products. In most cases, drivers also stock the shelves and do the paperwork that retailers require. Few companies make it as easy to do business with them as PepsiCo.
PepsiCo is an all-weather company that should appeal to long-term investors. The company is a S&P Dividend Aristocrat. The current dividend yield is a modest 2.8% — but the company has a 45 year history of increasing it annually.
Although there is no such thing as a stock that investors can buy and forget, PepsiCo comes as close to that ideal as possible.