I have long believed that one of the worst strategies in the market for investors to “rotate” in the so-called defensive stocks. This is General advice from specialists, especially in the more volatile market. Strategy sounds careful and even wise. In a nervous market, investors need to migrate to less risky stocks in order to protect your capital.
There are a number of problems with this argument, however. In particular, it requires investors to the market, which is almost impossible. And if it were possible — if the investors could see a correction or outright bear market — the right advice is not to buy “safe” stocks. It would be short stocks at high risk, or profit from the selling in real time as ProShares short S&P500 (real-time) (NYSEARCA:sh).
However, there are investors, whose protection is the main priority, whether because of the size of the portfolio and/or the timing of retirement or other major changes. For those investors more defensive investment strategy may make some sense, especially towards the end of the nearly decade-long bull market.
But here, too, there is a big problem. Many of the actions traditionally considered to be defensive don’t already have these characteristics. Not Procter & gamble co (Ticker NYSE:PG) or Coca-Cola Ko index (Ko), struggling to drive any growth amid tough competition, very low risk is more? Health care was a classic defense industry, but the cost and price pressures hitting the sector. Find safe stocks in a volatile economy is a much more difficult task than it was a decade ago.
Still, for investors who are worried about market correction in the near future but not quite ready to go to cash, there are several options. These seven shares offered in the protective characteristics and income. Correction can easily lead these stocks below. But loss must be lower than the market as a whole, even in the worst case. And in the long term, all seven should be strong buys for investors to prepare for retirement, whether soon or down the line.
Pension stocks to buy on correction: Corporation Exxon Mobil
Source: Shutterstock From
Exxon Mobil Corporation (index,home), must seem a terrible choice for this list. In the end, the price of oil generally correlates with the economy. A weaker economy usually leads to lower oil prices, which, it would seem that the main risk to stock CATFISH in the correction.
But Exxon Mobil is not a straight bet on the price of oil. In its downstream business and the chemicals actually benefit from lower oil prices. That’s why the shares of the SOM is not very good play for investors betting on increasing oil prices. Of course, that the internal hedge is also why SOM needs to survive the correction is relatively intact.
Indeed, as oil prices crashed beginning in 2008, even in the financial crisis, shares of Exxon have lost only about a third of its value from peak to trough. And now, CATFISH leaping from two-year low, and gives shade under 4%. The company expects to double revenues by 2025. And even if the decline in oil prices means that the company does not hit the target, and 16x forward EPS multiple prices in limited growth for starters.
SOM is not a stock that is going to go huge feet. But for investors seeking income and protection of the hand, is a strong, if illogical, choices.
Pension stocks to buy on correction: Total dollar
Source: Shutterstock From
Dollar General Corporation (Ticker NYSE:DG) is not only defensive and it can actually be counter-cyclical, meaning that it will be profitable in the economic downturn. Indeed, during the financial crisis, the Overall sales growth of the dollar was hot. Privileges increased by 9% in fiscal year 2008 (ending January 2009) and 9.5% this year, according to the 10-K filing. Rival Dollar Tree Inc. (Nasdaq:DLTR) saw same-store sales increase as well, although not quite on the same level.
Recently, the DG continues to perform well. As Wal-Mart Inc. (Ticker NYSE:wmt, ) have struggled lately, GD has strengthened. Dollar General published last month, great report Q4. This year, the company has become one of the largest beneficiaries of tax reform. Looking forward sustainable same store sales growth and expanding the offering to double-digit profit growth should continue for some time.
And the risks are lower than in other places. DG should be well protected from Amazon.com ink. (Nasdaq:events of the week) the threat that hangs over the retail space. Low price points and a heavy share of the necessary terms of total sales protects the company from economic downturn. Again, the company thrived during the last recession, and are likely to benefit from customers trading in the following.
One weakness of DG is relatively low, the dividend, which yields just 1.2%. But there is room for dividends to grow over time, especially in the capital, spent on opening new stores begins to moderate the next decade. With the stock still cheap at 13x EPS, and up the road that the low yield is more than kompensiruet many positive surrounding a common stock USD.
Pension stocks to buy on correction: Rogers communications
Source: Shutterstock From
Rogers Communications Inc. (USA) (Ticker NYSE:RCI) for a long time defensive strategy. With its MA bell days, that Index (T) was a classic widows and orphans stock. Verizon Communications Inc. (Ticker NYSE:VZ), and in this day and age, even with comcast Corporation (Nasdaq:CMCSA) may be considered somewhat defensive as well. Regardless of the depth of the recession, consumers typically pay their phone bill and now probably includes the cost of Internet access.
But I no longer care about the “pie shot” nature of the U.S. wireless space, which leaves me quite skeptical of t and OT, even at low multiplier. Cord-cutting remains a lot of problems for any promotion. And with US stocks Telecom major debt and work with a variety of issues related to CIP, I’m not sure that they would like to be corrected, as they were historically.
But in Canada, Rogers communications provides a convenient replacement. RSI has the same relatively inexpensive cost, as its peers in U.S. trading on 11X forward EPS. Instructions for 2018, the growth 3-5%, and free cash flow — not hot, but potentially better than organic figures in U.S. rivals, without considering the possible tax benefits reform.
And while the us carriers want more — in an attempt to get time Warner Inc (Ticker NYSE:TWX), Sprint Corp (Ticker NYSE:from) potentially merging with t-mobile USA, Inc. (Nasdaq:brands) — they will take on more debt as well. Unlike Rodgers should risk his history on payment of borrowed funds.
RSI is choppy dividends, and the current 3% yield+ significantly below that of T And in OT. But the stock does provide a significant income — and I expect both more security and more opportunities for capital gains in the future.
Pension stocks to buy on correction: Amgen
Source: Shutterstock From
The medical space is not as safe or defensive as it was before, but Amgen Inc. (Nasdaq:AMGN) still needs to be insured (pardon the pun) in the market or macro downturn.
The world’s largest biotechnology company still has an impressive pipeline, which should encourage growth for years to come. How will Healy in detail in February, there is concern about the near future growth of sales and profits. But at 12x forward EPS Amgen price for that profile needs to go on forever. The need for new drugs is not going anywhere, and even with the American system of healthcare focused on costs, Amgen still drove 40%+ Operating margins later.
At the same time, the recent pullback leaves AMGN looking just too cheap. Stock is just above support, which is spent going back to last summer. The average analyst target price implies 13% upside potential. And 3%+ dividend yield offers income as well. AMGN’s probably not the prettiest stock in the market, but it needs to have the protection of a disadvantage in the case of a correction, given the lack of correlation in the economy as a whole.
And long term, given the low rating, there is room for capital gains as the pipeline Matures and earnings growth begins again.
Pension stocks to buy on correction: community sun
Source: Shutterstock From
Manufactured housing community operator of sun communities Inc (Ticker NYSE:SUI) may seem like another strange choice for this list. Housing, typically, is cyclical, and indeed some of them fought in a more volatile market in the last few months. As the Lennart Corporation (Ticker NYSE:len) and KB home (Ticker NYSE:kbh and), for example, went 20% from January highs.
But the sun, along with peers of equity lifestyle properties, Inc. (NYSE:ELS), found an interesting niche. The high concentration of coastal communities to apply to pensioners, many of whom had a secure retirement, investment and/or social security income. The average tenant stays for thirteen years. And there’s even a counter-cyclical aspect of the business, as is evident from the results of the company during the financial crisis.
One problem here is the evaluation. IMS trading at a touch over 20x-the middle the guidance of FFO 2018, and all-time high. But investors pay for the quality, with strong, diversified asset base and a 3%+ dividend yield, this Wright seems to be one of the best and most reliable there is.
Pension stocks to buy on correction: McCormick
Source: the blue Djinn via Flickr
Again, I believe that the number of defensive consumer sector declined sharply, but McCormick and Co (Ticker NYSE:MKC, predictions:ICC.In) still counts.
Unlike soda or tobacco, where consumption is declining, spices and seasoning Category is growing. Millennial adoption is actually higher than that of their parents, providing a long-term tailwind. Private label competition a concern — and could accelerate if consumers get a more reasonable price, but McCormick’s own brand, which could offset the pressure.
The ICC, also not cheap. To 20x forward p/e multiple seems reasonable, but falls McCormick heavy debt load, much of it a result of the acquisition last year of two brands from Reckitt Benckiser group PLC (OTCMKTS:RBGLY). At EV/EBITDA on the basis of the ICC deals with a premium relative to most other stocks in the sector.
But this is the premium that it deserves. As Jonathan Berr noted that analysts firmly for the shares, and its organic growth is impressive. And with living up to the old-fashioned ideal of consumer goods of mass demand providing defensive qualities, is the best choice in the sector, if the market turns South.
Pension stocks to buy on correction: AvalonBay
Source: Lee via Flickr
Apartment by Wright – AvalonBay communities Inc (Ticker NYSE:AVB) may not be quite recession or even correction-proof. AVB shares did struggle during the financial crisis, losing more than two thirds of its value from the highs of 2007 to the lows of 2009.
It was, however, able to buy, as AVB has more than tripled since then. And AVB looks better suited for the correction of this time. It has less exposure to potentially hot and bubbly, the city’s rental markets than peers capital residential (Ticker NYSE:PCOS).
Millennials in particular, high flexibility and security for the household, still tend to rent apartments instead of buying homes. Indeed, as one hedge Fund this month claimed it’s possible that the American emphasis on single family homeownership is an anomaly on political grounds, and not a trend that will return in the future.
And correction, AVB, most likely, will not see a drop in demand, though, because new supply in the housing market is currently quite thin. Investors could add bid AVB, given the relatively secure yield and potential home owners, deciding to stay with the lease in a more uncertain macroeconomic environment. With AVB still investing to drive growth and sustainable profit growth over the past decade, there remain a number of drivers of revenue growth over the next few years. And there is a strong enough bull here to ride out any correction, and expect AVB will continue to work once that correction is over.
At the time of this writing, Vince Martin is a long stock of Corporation “Exxon Mobil” and mccormick & Co. in he does not Have positions in other listed securities.