"Another potential place for investors to find safety during a recession is Utility stocks. In addition to its relative stability and downside valuation protection, the XLU ETF pays a generous 4.6% dividend yield.
what it's like to shop at Walmart in Japan
Another potential place for investors to find safety during a recession is Utility stocks. In addition to its relative stability and downside valuation protection, the XLU ETF pays a generous 4.6% dividend yield.
Utilities have historically outperformed during economic downturns because Americans must keep the lights on and water flowing no matter how bad it gets. Many utilities have limited competition and operate under strict government regulations, which further serve to create a stable earnings and revenue environment.
The health care sector is one of the main sectors of the economy that has historically been a defensive place for investors to put their money during economic downturns.
While other businesses are shutting down amid the COVID-19 outbreak, demand for health care services is booming.
• Gilead Sciences US:GILD is the only stock on the list that was up between Feb. 19 and March 20. The company is among 15 that are testing treatments or working to develop COVID-19 vaccines. Click here for continual updates on the progress the companies are making. Jefferies analyst Michael Yee likes Gilead as a defensive play with a strong balance sheet.
• Shares of Linde PLC US:LIN have fallen in line with the broader market. However, Jefferies analyst Laurence Alexander sees potential for “growth insulated from industrial weakness and the coronavirus,” with “bond-like cash flow streams” for its industrial gas products, used in various industries, including health care.
• The Jefferies team called Mondelez International US:MDLZ, the maker of various snacks, including Oreo cookies and Cadbury, Milka and Toblerone chocolate, “the bellwether U.S.-based multinational food company.” A severe economic decline can hurt the company’s sales, but “chocolate/indulgence food categories usually do well in recessionary environments, and pantry-loading in the U.S. could help offset China pressure in the near-term,” the analysts wrote.
• According to Jefferies analyst Owen Bennett, British American Tobacco UK:BATS has “the most attractive long-term growth profile across the tobacco space,” because it continues to take cigarette market share and has “compelling RRP [reduced-risk products] offerings.” He forecasts “9% average constant currency earnings growth through 2023.”
• ServiceNow US:NOW specializes in integrating separate corporate functions through its software to improve efficiency. Considering the increased need for isolated teams to collaborate during the coronavirus outbreak, the continuing digital transformation of large companies can be expected to accelerate. Jeffereies analyst Samad Samana believes ServiceNow can “sustain at or near 28% subscription revenue growth through 2020.”
• Gilead Sciences US:GILD is the only stock on the list that was up between Feb. 19 and March 20. The company is among 15 that are testing treatments or working to develop COVID-19 vaccines. Click here for continual updates on the progress the companies are making. Jefferies analyst Michael Yee likes Gilead as a defensive play with a strong balance sheet.
• Shares of Linde PLC US:LIN have fallen in line with the broader market. However, Jefferies analyst Laurence Alexander sees potential for “growth insulated from industrial weakness and the coronavirus,” with “bond-like cash flow streams” for its industrial gas products, used in various industries, including health care.
• The Jefferies team called Mondelez International US:MDLZ, the maker of various snacks, including Oreo cookies and Cadbury, Milka and Toblerone chocolate, “the bellwether U.S.-based multinational food company.” A severe economic decline can hurt the company’s sales, but “chocolate/indulgence food categories usually do well in recessionary environments, and pantry-loading in the U.S. could help offset China pressure in the near-term,” the analysts wrote.
• According to Jefferies analyst Owen Bennett, British American Tobacco UK:BATS has “the most attractive long-term growth profile across the tobacco space,” because it continues to take cigarette market share and has “compelling RRP [reduced-risk products] offerings.” He forecasts “9% average constant currency earnings growth through 2023.”
• ServiceNow US:NOW specializes in integrating separate corporate functions through its software to improve efficiency. Considering the increased need for isolated teams to collaborate during the coronavirus outbreak, the continuing digital transformation of large companies can be expected to accelerate. Jeffereies analyst Samad Samana believes ServiceNow can “sustain at or near 28% subscription revenue growth through 2020.”
Sentiment trading is a distant cousin of value investing
Pfizer (PFE) is one of the biggest pharmaceutical companies in terms of market valuation. And Pfizer stock could be on an upswing after inking a deal with BioNTech (BNTX) to codevelop a coronavirus vaccine.
Here are eight ETFs to consider that could outperform during a U.S. recession.
Real estate is another popular flight-to-safety investment, and real estate investment trusts often pay extremely high yields.
The VNQ ETF holds 181 different investments that cover roughly two-thirds of the entire U.S. REIT market
Not only do dividend stocks and ETFs provide yield for investors when interest rates are nearly 0%, many dividend stocks actually outperform the broad market during economic downturns. The SDY ETF pays a 3.3% yield, which is leaps and bounds better than the interest rates you’ll find these days in U.S. Treasuries, high-yield savings accounts or certificates of deposit
Another market sector that performs relatively well when the economy tanks is the consumer staples sector.
When Americans cut their spending in times of uncertainty, those cuts don’t typically include toothpaste, toilet paper and laundry detergent. Consumer staples stocks are relatively recession-resistant, making them safe places to invest during market downturns.
Jobs in BLS
Certain tech stocks are well positioned to withstand expected hits to revenue in the first half of the year, said Oliver Pursche, chief market strategist at 1879 Advisors. His firm sees opportunities in subscription-based software companies such as Microsoft Corp, Adobe Inc and Cisco Systems Inc.
For Mark Travis, co-founder and a portfolio manager at Intrepid Capital, TJX and shoe brand Skechers USA Inc are among the companies that fit the bill. Both are well placed to take market share once the economy re-opens, he said
Warren Buffett, CEO of Berkshire Hathaway (ticker: BRK.A, BRK.B), has been one of the most consistent and successful investors on Wall Street for decades. Buffett's value-oriented, long-term approach has persevered through countless media panics, economic recessions and bear markets. Buffett once famously said investors should be "fearful when others are greedy and greedy when others are fearful.
Micron Technology Inc. shares were up 6% in after-hours trading Wednesday after the chip maker reported fiscal second-quarter earnings that beat Wall Street revenue estimates
bought shares in Chipotle Mexican Grill Inc and off-price retailer TJX Companies Inc, and added to positions in Starbucks Corp and McDonald's Corp.
Stocks to buy in a dip like Warren Buffett:-- Intel Corp. (INTC)-- Coca-Cola Co. (KO)-- Pfizer (PFE)-- Exxon Mobil Corp. (XOM)-- China Mobile (CHL)-- Salesforce.com (CRM)-- Wells Fargo & Co. (WFC)
Salesforce.com is a global leader in on-demand, cloud-based customer relationship management software
Wells Fargo is one of four bank stocks that are among Berkshire's nine largest stock holdings
China Mobile is the world's largest mobile operator with nearly 1 billion subscribers. Analyst Dan Baker says China Mobile has the strongest balance sheet among all telecom companies and one of the strongest balance sheets in the entire market. The company generates significant free cash flow, which has it well-positioned for the coming 5G upgrade cycle
Good says Exxon is the highest-quality integrated oil major. Exxon also pays a 10.6% dividend yield at current prices. Morningstar has a "buy" rating and $76 fair value estimate for XOM stock.
Pfizer is one of the largest pharmaceutical companies in the world. Analyst Damien Conover says the health care sector has historically been a defensive safe haven for investors during periods of market weakness and could provide protection from the coronavirus volatility. Conover says Pfizer's diverse portfolio of current drugs, its massive operational scale and its cash flow give it competitive advantages in developing and marketing its pipeline. The recent launch of cardiovascular drug Vyndaqel has been particularly impressive.
Coca-Cola is currently Berkshire's third-largest public stock holding. Johnson says Coca-Cola is the gold standard in a massive global beverage market and is a high-quality defensive play during times of uncertainty.
Intel has exactly the type of durable competitive advantage that Buffett loves. The company has huge scale advantages and dominant market shares in the PC and server microprocessor markets. Analyst Abhinav Davuluri says the recent market sell-off created a buying opportunity in certain semiconductor stocks, including Intel. Intel is Davuluri's top semiconductor stock pick, and he says the technology company should be able to navigate the difficult near-term environment while also investing in innovative process and designs, including 7-nanometer chips, artificial intelligence and next-generation automotive processors
Generac is seeing a rise in interest for their home stand-by generators amid growing concerns over the coronavirus.
Here are comments about all 15 companies:
great companies that have strong business models, healthy cash flow and very robust balance sheets
• Nobody needs to be reminded of how important Amazon.com US:AMZN is at a time when people are afraid to go shopping. It has been the second-best performer on the list since the S&P 500 hit its closing high Feb. 19. Jefferies analyst Brent Thill “sees the benefit of price increases in commodity products (particularly health care) more than offsetting any near-term inventory issues from idle factories in China,” according to the firm’s report.
• Shares of Visa US:V have fallen in line with the market. Transaction volume is likely to decline significantly, but the company has an advantage: It is not a lender. Tom Plumb, the manager of the Plumb Balanced Fund US:PLBBX, said March 16 that investors “should be buying” shares of Visa and its rival Mastercard US:MA. Jefferies analyst Trevor Williams believes the effect of COVID-19 on Visa’s business will be “transitory,” and that the “long-term growth profile of the business is unchanged.”
• The decline in Home Depot’s US:HD shares has created “an attractive buying opportunity,” according to Jefferies analyst Jonathan Matuszewski, who sees “the backdrop for home improvement” being supportive for the company “over the medium term.”
• Cisco Systems US:CSCO has “proven its resilience consistently during multiple periods of uncertainty, meltdown, contagion or crisis over the past 20 years,” according to the Jefferies report. Recurring revenue is expected by Jefferies analyst George Notter to make up a rising percentage of the company’s total sales as the “digital transformation of business” continues.
• Adobe Systems US:ADBE was also cited by Plumb as a long-term beneficiary of an accelerated movement by businesses toward cloud-based collaboration because of the coronavirus crisis. While the Jefferies report acknowledged that “no company is immune to economic downturns,” Thill of Jefferies sees Adobe as “levered to some of the most important software and internet trends,” and believes it will retain its top positions in “both digital media and digital experience.”
• Nvidia US:NVDA has been the third-worst performer on the list since Feb. 19. Jefferies analyst Mark Lipacis believes the selloff has created “a particularly attractive entry point” for the chip maker, as data-center computing moves to “a parallel processing model.”
• Abbott Laboratories US:ABT said March 18 that it received emergency Food and Drug Administration authorization to immediately ship 150,000 coronavirus tests to existing customers and would increase production to provide “up to 1 million tests per week.” Only $1.2 billion of the company’s $20 billion in debt is maturing over the short term, and the company has more than $4 billion in cash and is “more secure” than peers, with “less exposure to elective procedures,” according to the Jefferies report.
• Lewis Altfest, president of Altfest Personal Wealth Management in New York, said during an interview March 16 that he had “put some money into” large oil companies that are well-capitalized, with “big balance sheets and a history for stability” of dividend payouts, including Chevron US:CVX and its integrated-oil rival Exxon US:CVX, which is also an S&P 500 Dividend Aristocrat. According to Jefferies, “Chevron has the strongest positioning in the integrated oil sector,” with one of the lowest production break-even points and “the strongest balance sheet by far.” When asked if he saw any problems for Chevron or Exxon in maintaining their dividends, Altfest said: “No, I don’t.”
• Jefferies analyst Andrew Barish sees McDonald’s US:MCD as the “most defensive restaurant ... should the consumer falter given its value, convenience and marketing advantages,” according to the report. Barish even thinks it is possible the company will show “high single-digit” growth of earnings per share in 2020.
Walmart operates the Japanese supermarket chain Seiyu, which looks surprisingly similar to Walmart stores in the United States.
Walmart acquired the Seiyu grocery chain in 2008, six years after initially investing in it.
Seiyu carries a lot of American candy bars, sodas, meats, and more. It also has an arcade and food court.
Even though the store goes by a different name, shopping at Walmart in Japan is a lot like shopping at Walmart in the United States.
Walmart first invested in the Japanese grocery chain Seiyu in 2002, taking full control of the chainin 2008. Although the stores still operate under the name Seiyu, the chain is a wholly owned subsidiary of Walmart.
There are 328 Seiyu locations in Japan, including 236 supermarkets, 91 hypermarkets that sell apparel in addition to food and consumables, and one Tokyo location that stocks general merchandise but no food. It recently partnered with the Japanese e-commerce company Rakutento form a grocery delivery service that will launch in the second half of 2018.
Seiyu opened in 1963, long before Walmart was involved in the business. There are a lot of similarities between Seiyu in Japan and Walmart in the US. One similarity is the products offered — the Japanese stores offer products like American beef, Coca-Cola, Snickers, and Kit Kat. However, products like Kit Kats are often sold in varieties that aren't available in the US, like green tea and purple sweet potato.
Japanese supermarkets tend to be impeccably clean and organized, and Seiyu is no exception. At the same time, the stores are reminiscent of American Walmart stores, with bright fluorescent lights and wide aisles.