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7 Safe Stocks to Rely On When the Market Swerves

safe stocks - 7 Safe Stocks to Rely On When the Market Swerves

Source: ahmetemre / Shutterstock.com

Don’t expect market volatility to slow down anytime soon. We’re going to be on this ride because on simple market reality: The market doesn’t like uncertainty. And that’s why you need safe stocks.

There’s uncertainty aplenty today. Big tech (most of it anyway) is having its troubles with growth, legal issues, or both. But infrastructure isn’t always a sure bet because commodities and other aspects of the infrastructure and construction industries are dependent on imports.

Supply chain issues are making things tough. Energy prices – oil is now north of $90 a barrel — are also heading higher. Employment numbers are up and inflation continues to rise.

Add to all this that fact the central banks are deciding that now is the time to loosen their reins on the world’s major economies.

In times like these, don’t look to sectors. Look for individual stocks for safety. The ones below are some of my Portfolio Grader favorites.

  • Amphastar Pharmaceuticals (NASDAQ:AMPH)
  • Builders FirstSource (NYSE:BLDR)
  • Choice Hotels (NYSE:CHH)
  • Commercial Metals Co (NYSE:CMC)
  • iRadimed Corp (NASDAQ:IRMD)
  • NAPCO Security (NASDAQ:NSSC)
  • Gladstone Investment Corp (NASDAQ:GAIN)

Safe Stocks: Amphastar Pharmaceuticals (AMPH)

image of several bottles of various prescription medications
Source: Shutterstock

Pharmaceutical companies cover a wide range. Some are small companies with one unique technology for one specific condition that’s trying to make it. Others focus an array of products on a more diverse set of medical challenges.

In this kind of market the safe stocks tend to be in the latter category. And that’s exactly where AMPH resides. Amphastar isn’t using Nobel laureate research teams to reinvent cancer treatment. The company has 14 products that are already in the market that address a broad variety of needs at the consumer, surgical, and emergency care levels.

It produces Primatene Mist, an over-the-counter inhaler for asthma sufferers. It also produces crash kits for diabetics, opioid overdose, and allergic reactions. These are essential tools. AMPH has a line of drugs that are used to help facilitate surgeries as well.

The point is, regardless of the market forces, healthcare challenges are a constant. And AMPH is well positioned to take advantage. And its $1 billion market capitalization means it’s small enough to grow quickly. It’s also an attractive buyout target.

AMPH stock is up nearly 30% in the past three months while other stocks languish. And there’s no reason to suspect that its current momentum will diminish.

This stock has an “A” rating in my Portfolio Grader.

Builders FirstSource (BLDR)

 Builders FirstSource (BLDR) exterior and trademark logo.
Source: Ken Wolter / Shutterstock.com

Real estate has been an odd sector. Interest rates are rising, yet demand remains high. Some of that is because materials costs were high for a long time and that made it tough to build new properties. It also meant that prices were much higher adjusted to rising costs in supplies.

That issue has somewhat abated, except fittings and other materials that are caught up in the supply-chain mess. But the fact remains that commercial and residential properties are in high demand as many buyers look to lock in today’s low rates.

BLDR supplies key wood products to contractors and subcontractors including trusses, stairs, wall panels, and other materials including custom millwork. With lumber prices now back to normal, demand has been high and should remain that way for some time.

BLDR stock has gained 62% in the past 12 months, yet it trades a current price-to-earnings ratio (P/E) below 10. And its $13 billion market cap makes it a good-sized company that is geographically diversified across the U.S. so it can capitalize on booming markets.

This stock has a “B” rating in my Portfolio Grader.

Safe Stocks: Choice Hotels (CHH)

A magnifying glass zooms in on the Choice Hotels (CHH) website.
Source: II.studio / Shutterstock.com

If you’ve stayed at a Clarion, Ascend, Quality Inn, MainStay Suites, or Cambria hotel, you’ve stayed at CHH property. The company has over a dozen brands under its flag. Choice Hotels operates in over 40 countries in more than 7,000 properties.

But the one thing that gets it into this pack of safe stocks is the fact that the company is franchised based. That means it licenses its brands to other to run. It collects franchise fees and all the revenue from property owners for maintaining that brand.

That means it has less operational costs and revenue remains more stable as the economy fluctuates. Plus, CHH’s price points are focused on the business traveler as well as the cost-conscious consumer.

This has helped CHH stock weather much of the pandemic storm and now business is picking up. The stock has gained 40% in the past 12 months, although it’s down in recent weeks. But that just makes it a better buy.

This stock has an “A” rating in my Portfolio Grader.

Commercial Metals Co (CMC)

CMC Commercial Metals Company logo close-up on website page, Illustrative Editorial
Source: Postmodern Studio / Shutterstock.com

Starting as a scrap metal broker over a century ago, CMC established its first mill in Texas in 1947. Since then it has become a leading steel rebar and metal producer in the US. And it also has a steel mill in Poland that serves the European market as well.

Steel rebar prices have appeared to bottom in December after reaching multi-year highs during the pandemic. Now that construction projects are back up and running and the infrastructure stimulus monies are becoming available, steel demand is rising again. And that’s great news for CMC and why it’s here with these other safe stocks.

Also remember that the European Union also has a major infrastructure stimulus package that it’s rolling out as well. That will also help CMC.

CMC stock made a run in the past 12 months — it gained 60% — because of the anticipation of the infrastructure spending. But the stock still remains strong, up 2.28% in the past three months. It also has a super low current P/E of 7.5.

This stock has an “A” rating in my Portfolio Grader.

Safe Stocks: iRadimed Corp (IRMD)

3d rendering mri scan machine or magnetic resonance imaging scan device, IRMD makes such machines
Source: Phonlamai Photo / Shutterstock.com

Magnetic resonance imaging (MRI) has gone from a boutique medical application to the mainstream in the past few decades. It’s even so common now that the toy brand LEGO has even created an MRI LEGO set for kids who have parents (or themselves) undergoing the procedure. There’s even new MRI for mobile use.

What’s more, they’re finding new diseases where MRIs can be used for earlier detection. For example, there are new studies that show MRIs can help diagnose multiple sclerosis earlier than conventional methods. They’re also using MRIs for lungs and now have the ability to use on people with implanted devices.

You see, because of the powerful magnets, there are very strict limitations on metallic objects in and around MRIs. And IRMD specializes in equipment and materials that can be used with MRIs.

What makes this one of my safe stocks is the fact that MRIs are an advancing technology and IRMD is a key player in the sector. Hospitals and MRI centers already likely use their products, so expanding the business is easy.

IRMD stock is fully priced but there’s every reason it’s up over 100% in the past 12 months and up 36% in the past three months. It’s journey is just beginning. And with a market cap of just over half a billion dollars it could be a big takeover play.

This stock has an “A” rating in my Portfolio Grader.

NAPCO Security Technologies (NSSC)

Source: Nuroon Jampaklai / Shutterstock.com

When it comes to security, many people these days think more about the opportunities in cybersecurity. But physical security for rooms and builds remains just as important as ever.

While work from home may have diminished growing demand for security measures in the office space, but e-commerce means warehouses and distribution centers security concerns are greater. And even a sparsely populated office environment has new security needs.

NSSC has been delivering doors, locks, and access systems since 1969. It’s not a big company; it has a market cap of $737 million. But it’s a well respected brand and it continues to upgrade its offerings. It now has software as a service (SaaS) offerings for buildings including environmental systems, lighting, and security.

Literally, and figuratively a safe stock. NSSC has gained almost 32% in the past 12 months but that includes some recent losses during the selloff. It’s on sale.

This stock has an “A” rating in my Portfolio Grader.

Safe Stocks: Gladstone Investment Corp (GAIN)

two businesspeople sit at a table stacking up coins in the shape of an ascending bar chart
Source: Shutterstock

Business development companies (BDCs) are an interesting group. They operate like a venture capital fund for individual investors. By law, 70% of their assets need to be invested in public or private firms with market values under $250 million.

Individual investors put their money into the BDC and it invests the monies in businesses that are either domestic or international. BDCs are also like real estate investment trusts and limited partnerships where the shareholders are technically business partners. BDCs must pay out 90% of their profits to shareholders. GAIN, like others, do this with their dividends.

GAIN focuses on small companies with revenue between $20 million and $100 million. All the companies it currently holds are located in the US. It uses its investment capital to fund these businesses, acquire ownership positions, look for opportunities to take them public, or find merger partners.

This is an exciting sector and BDCs are a way to get in on the expanding entrepreneurial marketplace with a veteran firm. GAIN has been in the business since 2005. Its stock has risen 36% in the past 12 months, yet it trades at PE below 5. And it has a 5.7% dividend as well.

This stock has an “A” rating in my Portfolio Grader.

On the date of publication, Louis Navellier has positions in AMPH, BLDR, CHH, CMC, and IRMD in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.

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