Celebrate Investments: Elevate Your Spirits with These Stock Increases
In tough financial times, it's essential to hold onto some strong stocks to keep your investments afloat. AB InBev, with its impressive 30% gain this year, is a prime example amidst the JSE all share's more modest 7.8% increase.
When weathering economic hardship, certain stocks that offer essential goods or services and maintain a steady demand can outperform other sectors. Let's explore some examples beyond AB InBev:
- Consumer Staples (Essential Goods): Procter & Gamble (PG) and Kimberly-Clark (KMB) lead the way in household essentials like detergent and hygiene products. PepsiCo (PEP) and Coca-Cola (KO), as global beverage powerhouses with solid brand loyalty, often fare well even during recessions.
- Healthcare: Johnson & Johnson (JNJ) and Pfizer (PFE) provide crucial pharmaceuticals and medical products, providing them with a steady cash flow even in turbulent economic times. UnitedHealth Group (UNH), offering insurance and healthcare services, also benefits from the inelastic nature of medical needs.
- Utilities: NextEra Energy (NEE) and Duke Energy (DUK) are regulated utilities that offer essential services like electricity and water, giving them predictable revenue models.
- Real Estate (Essential Infrastructure): Data centers like Digital Realty Trust (DLR) and telecom infrastructure providers such as SBA Communications (SBAC) performed exceptionally well during periods of early 2020 volatility due to surging connectivity demands.
- Low-Volatility Growth Hybrids: Although Netflix (NFLX) is a discretionary stock, its role as affordable entertainment during lockdowns led to a 16% return in Q1 2020, demonstrating the resilience of hybrid stocks in specific circumstances.
When building a portfolio during economic downturns, prioritize large-cap consumer defensive stocks and diversified healthcare providers. These stocks' earnings are least correlated with economic cycles. Focus on companies with strong balance sheets, like Microsoft (MSFT) in tech, and those offering stable dividends, such as Colgate-Palmolive (CL).
In difficult financial situations, Fortune 500 companies like Colgate-Palmolive (CL) offering essential household items can remain resilient, offering a steady investment option. Investing in global alcoholic beverage giants may also show strength, as demonstrated by AB InBev's 30% growth this year outpacing the JSE all share's 7.8% increase. Real estate infrastructure providers, such as Digital Realty Trust (DLR), have shown exceptional performance in volatile markets. Lastly, diversified healthcare providers and utilities companies with strong balance sheets, such as Microsoft (MSFT) in tech and NextEra Energy (NEE), can also provide stability in the stock-market, due to their earnings' low correlation with economic cycles.
