These are trying times for growth investors, so maybe it’s a good time to be trying something different. You know those all-weather defensive stocks that many have been rotating into these days? Shouldn’t you consider at least some exposure to businesses that can hold up better than most when the next market crash comes around?
Costco (NASDAQ: COST), AT&T (NYSE: T), and Coca-Cola (NYSE: KO) are recession-proof for very different reasons. All three are still stocks that you might want to dig into before the market buckles. Let’s take a closer look.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
Kicking off a list of safe stocks with Costco might seem obvious and ludicrous at the same time. On the one hand, Costco is the country’s undisputed top dog in warehouse clubs. If the stock market starts to buckle, there’s a good chance it’s happening because the economy is wobbly. Costco eats that opportunity up.
Even if you’re not a Costco member, you know the chain that sells bulk-sized essentials at razor-thin margins. The annual fees it collects account for most of its profit. Good luck beating that $1.50 hot dog and soft drink combo. What you might not know is that it has failed to deliver positive annual revenue growth just once in the last 33 years. And even during the recessionary 2009, when the chain proved mortal, the top line only saw a 1.5% dip.
Costco is obvious, but I also mentioned that it was ludicrous. A safe stock is also typically attractively priced. Costco stock is not cheap.
The warehouse club giant is trading for more than 50 times its trailing earnings. It’s not a fast-growing retailer. It has posted double-digit annual top-line growth just twice in the last 13 fiscal years. Its 0.5% dividend yield isn’t going to turn heads.
However, Costco’s reliability is worth a premium. I can’t recall the last time Costco was textbook cheap. The price of admission is a premium, and — like the items it sells — you just hope it hasn’t been marked up by much.
Turning from retail to that computer in your pocket, AT&T is one of the two largest wireless carriers in the country. The all-weather appeal here is that you need your phone. You can cancel streaming subscriptions, skip a few coffeehouse lattes, and entertain yourself at home to save some dough. You’re not giving up your mobile connection to the world.
