We’re facing interesting times to say the least. With a critical election year coming up, all sides – particularly the Trump administration – are eager to showcase their accomplishments. However, an ugly U.S.-China trade war makes things quite treacherous, especially if you’re seeking viable stocks to buy.
Here’s the reality: according to multiple sources, our economy is slowing down. According to a CNN Business report, though, President Donald Trump could revitalize the growth engine by getting a deal done. This in turn would likely spark a resurgence in investor sentiment toward various stocks to buy.
While the president does have this trump card, so to speak, it’s not as easy as it sounds. As you might have guessed, this current administration isn’t exactly popular. Moreover, sentiment is deeply divided along partisan lines. Therefore, Trump can’t look weak on core issues that matter to republicans, and U.S.-China relations is one of them.
Of course, no one really knows for certain how this will all play out economically. As such, I believe that the best course of action is to arm your portfolio with safe stocks to buy. I’m talking about typically boring companies that have either reliable demand channels or will have them in the coming years.
Ultimately, this is no time to get cute. While I’m not advocating going defensive completely, these 10 safe stocks to buy offer a balance between protection and returns.
Home Depot (HD)
Needless to say, it’s a crazy world out there, especially right now. As such, finding the perfect stocks to buy can become quite a chore. In these circumstances, it’s best to have some exposure to “vanilla” organizations like Home Depot (NYSE:HD).
Put simply, HD stock is a no-brainer in almost any market environment. As Jason Carlyle, manager at salvage home-materials reseller firm Stardust noted, “Even in 2008 when the whole economy crunch went down, a lot of people weren’t buying houses necessarily…But they were spending the money on remodeling the houses that they were already owning at that point.”
This sentiment underlines the bull case for HD stock during an economic downturn. But even in an upswing, the need for renovation doesn’t follow economic cycles. Thus, Home Depot is almost guaranteed to see demand.
Procter & Gamble (PG)
Among boring stocks to buy, I couldn’t think of a name more sleep-inducing than Procter & Gamble (NYSE:PG). I’m not trying to belittle the company, nor play down the importance of PG stock. However, I just don’t wake up in the morning getting pumped over diaper sales.
But because this company is so boring, it drives the reason why we should consider PG stock. While no one in their right mind will trample over each other on Black Friday for Procter & Gamble branded products, their constant demand ensures predictable revenue streams.
After all, no one will sacrifice the core essentials of personal care unless the economy completely melts down. While we’re facing tough times, I don’t think we’re entering Mad Max territory. Plus, the current 2.4% dividend yield for PG stock provides another barrier of protection.
Campbell Soup (CPB)
According to a recent consumer market survey, ubiquitous canned goods manufacturer Campbell Soup (NYSE:CPB) ranked highly for brand personality. To compute Campbell Soup’s grade, the survey producers measured attributes such as trust, openness, imagination and friendliness. Moving forward, I believe this reputation bodes very well for CPB stock, especially if we suffer a downturn.
Even though a company like Campbell Soup represents core human necessities, that doesn’t mean it won’t compete with its rivals. As the consumer base collectively tightens its belt, even small advantages will take on greater importance. Having established a strong connection with their customers, this key asset will provide stakeholders of CPB stock some confidence.
Also, CPB stock appears to be in the middle of a long-term recovery. Since the summer of 2016, shares have trended downward. But as consumers save their money for the essentials, you can expect CPB to steadily trek higher. Thus, keep Campbell’s on your short list of safe stocks to buy.
In early July of this year, I stated that Walmart (NYSE:WMT) was likely a solid long-term investment. While the U.S.-China trade war imposed ugly implications for the retail sector, management also has a solid track record. They know how to handle crises, which provides confidence for WMT stock.
But I did have a contrasting opinion for traders and those with a nearer-term outlook. As great of a company as Walmart is, here’s the painful reality: you can never escape consequences burning bridges with the world’s second-biggest economy. As such, the threat to margins that the trade war levered meant that WMT stock was risky.
Sure enough, after rising a bit, WMT stock eventually tumbled. But by mid-August, shares were back on their merry way. Looking back, I think the quick recovery was due to investors’ belief in Walmart’s secular demand. If the stinky stuff hits the fan, we’ll all be shopping at Walmart.
Sure, it’s pessimistic, but this logic also makes WMT one of the ideal safe stocks to buy.
Costco Wholesale (COST)
Shopping at Walmart is like drinking Bud Light. If you have the money, you’ll choose something else. And that something else in the big-box retailing arena is Costco Wholesale (NASDAQ:COST). In many ways, COST stock is the best of both worlds: the underlying company enjoys secular demand, but their customers love shopping there for discretionary reasons as well.
That’s because Costco shoppers are addicted to the experience. For starters, the company offers an air of exclusivity: you have to pay for a membership. Judging by the rising COST stock price, it’s fair to say people are more than willing to open their wallets.
Second, Costco creates an environment where you feel that you’re saving money, whether you’re doing so or not. As Bob Nelson, Costco’s senior vice president of financial planning and investor relations put it, a good deal “feels like winning.” Nelson went on to ask rhetorically, “Would you rather win or lose?”
Compared to other safe retail stocks to buy, Costco has this consumerism process down to a science; thus, I think you’re safe with COST stock.
With companies like Square (NYSE:SQ) bringing digital payment processors to small businesses, physical cash is increasingly an endangered species. And recession or not, this dynamic augurs well for Visa (NYSE:V). As the largest credit card company in the world with 323 million cardholders, V stock should see sustained demand.
Better yet, Visa has strong fundamentals that belie its stereotypically boring nature. For instance, in the company’s most recent earnings report for the quarter ending June 30, Visa rang up sales of $5.84 billion, up over 11% from the year-ago level. Plus, the organization has consistently strong free cash flow, bolstering the reliability argument for V stock.
Finally, let’s consider the cynical argument for credit cards. If a recession hits the U.S., many consumers will need to stretch their dollars. Like it or not, that involves a lot of plastic, which naturally benefits V stock.
I’m not particularly mechanically inclined. Therefore, I find industrial supply company Fastenal (NASDAQ:FAST) more boring than usual. Originally specializing in fasteners – which by itself is a snooze-inducing endeavor – Fastenal later graduated to riveting product lines such as adhesives, safety equipment and plumbing materials. Still, these products that many white-collar workers don’t think too much about drive the case for FAST stock.
While we live in an increasingly digitalized environment, what makes things tick are ultimately yesteryear technologies. And I’m not just talking about the underpinnings of our physical infrastructures. Rather, demand for blue-collar workers in the U.S. has skyrocketed. Why? With society emphasizing college education and white-collar office jobs, nobody wants to get their hands dirty.
Nevertheless, this dynamic sets up an opportunity for FAST stock. Even without the workers, the work has got to get done. Sure enough, Fastenal is enjoying robust revenue growth. For instance, in its most recent second-quarter earnings report, the company rang up $1.37 billion. That’s up nearly 8% from the year-ago quarter.
Finally, Fastenal pays a pretty nice dividend at nearly 2.8%. Thus, don’t ignore FAST stock on your list of safe stocks to buy.
I’m probably going to get in trouble for saying this. But for many people, spending time with really old folks is the epitome of boring. While I can’t fix this sentiment, I can at least direct you to Welltower (NYSE:WELL). As a real estate investment trust specializing in assisted-living facilities, you can at least profit from WELL stock.
Among safe stocks to buy, I believe Welltower has the best long-term catalyst. In 2011, the oldest baby boomers started hitting the traditional retirement age of 65. From then until 2030, approximately 10,000 boomers will reach that benchmark every day. When you combine general medical advancements over the years, we can anticipate a sea of humanity. Thus, WELL stock is a name you can’t ignore.
Better yet, you don’t have to wait to see the potential in WELL stock. Year-to-date, shares have jumped over 38%. Additionally, in Q2, Welltower delivered top-lines sales of $1.3 billion, up 18.5% from the year-ago quarter. Given the macro catalyst, WELL is probably one of the safest stocks to buy.
Americans love their pets, and I would add, probably too much in many cases. But the numbers don’t lie. In 2018, the U.S. pet market size increased 5% to a whopping $86 billion. Judging by the growing enthusiasm for pet care, I don’t see this trend declining anytime soon. Thus, you’ll want to consider Zoetis (NYSE:ZTS) and ZTS stock among your safe stocks to buy.
While not necessarily a household name, Zoetis used to be a Pfizer (NYSE:PFE) subsidiary before it was spun off in 2013. For investors anyways, this was a fortuitous move. It gives them direct access to the burgeoning pet care market without having to deal with the often-volatile human healthcare sector. Plus, ZTS stock pays a dividend, although the yield is a very small 0.5%.
But another big catalyst for ZTS stock is that pet love isn’t a uniquely American phenomenon. Instead, industry experts believe the global pet care market will hit $269 billion by 2025. Included in the mix is China, which has witnessed tremendous growth in this arena.
Newmont Goldcorp (NEM)
For my final pick, I’m going to really stretch the definition of safe stocks to buy with Newmont Goldcorp (NYSE:NEM). Historically of course, mining companies don’t have the greatest reputation. That said, we’re living in unprecedented times. Certain aphorisms don’t apply any more, which is why I believe NEM stock has become at least a safer bet.
As a protective investment, I prefer physical gold due to the metal lacking third-party risk. Nevertheless, NEM stock is one of the biggest mining investments, often trading the top spot with Barrick Gold (NYSE:GOLD). Thus, for those who don’t want to deal with the hassle of physical ownership, NEM provides a worthy “paper” alternative.
Further, anybody who has any concerns about the sustainability of our financial system should at least consider precious metals-based investments. For an alarming wake-up call, take a listen to my interview with Brien Lundin, president and CEO of Jefferson Financial and host of the New Orleans Investment Conference. If this doesn’t get you thinking about gold, nothing will!
As of this writing, Josh Enomoto is long gold bullion.