It has already been a turbulent year for investors, full of concerns ranging from geopolitical tensions and rampant inflation to interest rate hikes and the pandemic. The Russian invasion of Ukraine and rocketing crude oil prices have further deteriorated the sentiment among investors who buy Reddit stocks.
As retail traders brace for a recession, we increasingly witness heated debates about which defensive stocks to buy during these challenging times. Participants on Reddit forums seem convinced that macroeconomic and geopolitical headaches will make it difficult for stocks to end 2022 in positive territory.
The stock market may in fact be facing too many headwinds to expect decent returns this year. In fact, some analysts increasingly suggest it will be a success if stocks only fall in the single digits in 2022. So far this year, The Nasdaq 100 has plunged 14% while the S&P 500 is down 8%.
Against this backdrop, here are seven Reddit stocks that could shield investors from a potential recession in 2022:
- Albertsons (NYSE:ACI)
- Becton Dickinson (NYSE:BDX)
- Chewy (NYSE:CHWY)
- Hormel Foods (NYSE:HRL)
- Johnson & Johnson (NYSE:JNJ)
- Procter & Gamble (NYSE:PG)
- Walmart (NYSE:WMT)
Reddit Stocks: Albertsons (ACI)
52-week range: $17.73 – $37.99
Dividend yield: 1.3%
First on today’s list is Albertsons, the second-largest traditional grocer stateside. It operates more than 2,200 supermarkets under 20 banners across 34 states. Private equity firm Cerberus Capital is the largest shareholder in the company, which went public in June 2020.
Albertsons issued third-quarter 2021 results on Jan. 11. Revenue increased 18% year-over-year (YOY) to $16.7 billion. Adjusted net income came in at $457 million, or 79 cents per share, up from $387 million in the prior-year quarter. Cash and equivalents ended the period at $2.7 billion.
On March 1, the grocer announced it had launched a “strategic review” of its business. Such an announcement typically suggests management is either looking to sell the company or considering a financial re-engineering to boost shareholder value. Albertsons shares soared 20% over the next week after the announcement.
ACI stock is currently at $36, up a substantial 94% over the past 12 months. Shares are trading at 12.4 times forward earnings and 0.2 times trailing sales. Meanwhile, the 12-month median price forecast for Albertsons stock stands at $33.
Becton Dickinson (BDX)
52-week range: $235.13 – $280.62
Dividend yield: 1.3%
Continuing with our list is Becton Dickinson, which manufactures medical supplies, laboratory equipment and diagnostic products. The group operates in multiple segments with a highly diversified business tightly linked to the global healthcare system.
Management released Q1 2022 results on Feb. 3. Due to falling demand for Covid-19 testing, revenue declined by 6% YOY to $5 billion. Net income came in at $655 million, or $2.28 per diluted share, down from $981 million in the prior-year quarter. Cash and equivalents ended the period at $2 billion.
The group is well-known among investors as a stable stock. Recurring revenue from sales of essential items like sample-collection vials, catheters and anesthesia implies steady demand as well as cash flow.
BDX stock trades above $260, up almost 12% over the past year. The company has increased dividend payouts every year for the past 50 years, making it a Dividend King.
Shares are trading at 19.7 times forward earnings and 3.7 times trailing sales. Finally, the 12-month median price forecast for Becton Dickinson stock is $285.
Reddit Stocks: Chewy (CHWY)
52-week range: $35.59 – $97.74
Next on our list is Chewy, the largest online retailer of pet-related products stateside. It provides food, supplies, medication and other pet-health products, as well as services through its retail website and mobile app. In total, it offers approximately 70,000 products from 2,500 partner brands.
Management announced Q3 financials on Dec. 9. Revenue grew 24% YOY to $2.2 billion. Net loss came in at $32.2 million compared to a net loss of $32.8 million in the prior-year quarter. Cash and equivalents ended the quarter at $727 million.
Chewy managed to maintain sales and customer growth in 2021. Active customers grew 14.7% YOY to 20.4 million. Net sales per active customer increased by more than 15%.
Its comprehensive ecosystem built around pets has accelerated the adoption of Chewy’s Autoship, or its repeat delivery service. It accounted for 70.6% of net sales in Q3 2021.
CHWY stock is trading around $45, down 47% over the past year and 24% year-to-date (YTD). The stock hit its 52-week low of $35.59 on March 15, but has since managed a double-digit rebound.
Shares are trading at only 1.9 times trailing sales, around the lowest level in recent quarters. The 12-month median price forecast for Chewy stock stands at $68.
Hormel Foods (HRL)
52-week range: $40.48 – $53.19
Dividend yield: 2.1%
The next Reddit stock to watch is Hormel Foods, one of the largest manufacturers and marketers of consumer-packaged goods and branded foods domestically. It is well-known among consumers for its many distinguishable brands like Spam, Jennie-O and Skippy.
Hormel Foods released Q1 2022 results on March 1. Revenue increased 24% YOY to $3 billion. Net income came in at $239.6 million, or 44 cents per diluted share, up from $222.3 million in the prior-year period. Cash and equivalents ended the quarter at $824.4 million.
Management sees foodservice as its most significant growth driver in fiscal 2022, as sales have already increased 51% YOY in fiscal Q1 2022. The channel accounted for 28% of total revenue in fiscal 2021. In addition, incorporating Hormel’s precooked and fully cooked meat products into their menus implies significant cost savings for restaurants and other eateries.
HRL trades around $50, up nearly 4% over the past year. We should note that it is a Dividend King that currently generates a 2.1% yield.
Shares are trading at 25.9 times forward earnings and 2.3 times trailing sales. The 12-month median price forecast for HRL stock is $48.
Reddit Stocks: Johnson & Johnson (JNJ)
52-week range: $155.72 – $179.92
Dividend yield: 2.4%
Another prominent company on our list is Johnson & Johnson, one of the largest and most diverse healthcare conglomerates in the world. Its business covers many key areas within the healthcare industry, including consumer products, pharmaceuticals and medical devices.
Johnson & Johnson issued Q4 2021 results on Jan. 25. Revenue increased 10.4% YOY to $24.8 billion. Adjusted net income soared 14.4% YOY to $5.68 billion, or $2.1 per diluted share, up from nearly $5 billion in the prior-year quarter.
InvestorPlace users will remember in November 2021, J&J announced plans to spin off its slowest-growing consumer products segment. The new publicly-traded company is likely to enter the market by November 2023.
This spinoff will help J&J focus on its higher margin pharmaceuticals and medical devices businesses. We should point out the drug segment accounts for the bulk of the company’s sales growth and operating margin. Pharmaceutical sales surged 16.5% YOY to $14.3 billion, driven by a $1.6 billion boost from COVID-19 vaccines.
JNJ stock trades around $175, up 10% over the past 12 months. It is also a Dividend King that has raised its payout for the past 59 years. The current price supports a yield of 2.4% dividend.
Shares have a favorable valuation at 16.1 times forward earnings and 4.8 times trailing sales. The 12-month median price forecast for JNJ stock stands at $183.
Procter & Gamble (PG)
52-week range: $129.99 – $165.35
Dividend yield: 2.3%
Continuing with our list is Procter & Gamble, one of the largest consumer product manufacturers worldwide. It boasts a broad portfolio of recognizable brands, including at least 20 brands that generate more than $1 billion each in annual global sales.
Management announced Q2 2022 results on Jan. 19. Revenue increased 6% YOY to $21 billion. Net earnings came in at $4.2 billion, or $1.66 per diluted share, up from $3.9 billion in the prior-year quarter. Cash and equivalents ended the period at $11.5 billion.
Wall Street concurs the consumer giant boasts a loyal customer base. As a result, P&G was able to raise prices for key products such as Pampers diapers and Gillette razors, passing on increasing costs to consumers. Despite a 250 basis-point YOY decline, the operating margin for the quarter stood at a healthy 24.7%. Management anticipates sales for the fiscal year 2022 growing by 3% to 4%.
The board returned $11.9 billion to shareholders via dividends and share repurchases through the first half of fiscal 2022. Meanwhile, the stock generates a 2.3% dividend yield.
PG stock is around $150, up more than 18% over the past year. Shares are trading at 22.4 times forward earnings and 4.7 times trailing sales. The 12-month median price forecast for PG stock is $175.
Reddit Stocks: Walmart (WMT)
52-week range: $131.63 – $152.57
Dividend Yield: 1.6%
Our final recommendation is the largest retailer in the world: Bentonville, Arkansas-based Walmart. It operates a chain of hypermarkets, discount department stores and grocery stores, which now total more than 10,500 locations in 24 countries.
Walmart released Q4 2022 results on Feb. 17. Revenue stood at $152.9 billion, up 0.5% YOY. Net income came in at $3.6 billion, or $1.28 per diluted share, compared to a net loss of $2 billion in the prior-year quarter. Cash and equivalents ended the period at $14.8 billion.
The retail giant uses its massive size and scale to gain market share against its peers. It also prioritized its in-stock levels, increasing inventory by 26% and helping the retail chain avoid any related issues.
Walmart is highly regarded for offering competitive prices across key segments while maintaining profitability. As a result, management is forecasting higher profits and expanding margins in 2023.
The retailer recently increased its dividend by 2%, marking its 49th successive year of dividend hikes. It is on its way to becoming a Dividend King next year. WMT stock generates a 1.6% dividend yield.
WMT stock changes hands for almost $145, up nearly 10% over the past year. Shares trade at 21.1 times forward earnings and 0.7 times trailing sales. The 12-month median price forecast for Walmart stock stands at $166.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
