SPECIAL REPORT The Top 7 Stocks for 2024

Safe Haven Alert: 3 Value Stocks to Guard Against Bull Market Uncertainties

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  • Investor uncertainty can be offset by buying quality stocks that offer downside protection, but also the potential for capital appreciation.
  • American Express (AXP): The credit card issuer protects against the market’s vagaries by targeting high-wealth consumers who are the last to feel any downturn.
  • Genuine Parts (GPC): The auto parts retailer is benefiting from the high-cost environment of buying new and used cars.
  • UnitedHealth Group (UNH): The health insurer’s stock is cheap despite providing a vital service that individuals can’t do without.
  • Investors would do well to buy these safe bets in an uncertain market.
stocks for bull market protection - Safe Haven Alert: 3 Value Stocks to Guard Against Bull Market Uncertainties

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The stock market is in the midst of a pretty remarkable run.

After collapsing almost 20% last year, the S&P 500 is up 26% from its lows. That’s almost good enough to be classified as a bull market.However it pulled back a bit from its recent peak, then jumped again, introducing future uncertainty.

Investors should use due caution in this environment. Cooling inflation and better than expected corporate earnings amid a robust economy suggests more room to run. On the other hand, rising consumer indebtedness and tight credit markets fuels suspicion of a looming recession. The New York Federal Reserve (FED)predicts a 66% chance of a recession by summer of 2024.

Now is the time to find safe haven value stocks. Protect your portfolio’s downside while still offering potential for capital appreciation. These three reliable value stocks look like a perfect fit regardless of the market’s direction.

American Express (AXP)

an American Express (AXP) credit card sticking out of someone's pocket
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Few businesses have the cachet of credit services provider American Express (NYSE:AXP). 

“You can’t create another American Express,” Warren Buffett told Bloomberg in December. AXP is the fourth biggest holding in Berkshire Hathaway (NYSE:BRK-A NYSE:BRK-B). Also, AXP is the fourth largest general-purpose card network in the world based on purchase volume. And it’s definitely in first place when it comes to prestige credit cards.

How does AmEx make most of it revenue? It’s not interest charges, but rather the fees it charges merchants for facilitating those transactions. The company’s term “discount revenue” totaled $30.7 billion in 2022, up 25% from the year prior. In contrast, interest income was just $12.7 billion.

Because it targets wealthier, high-spending customers, American Express’ business doesn’t feel the impact of market or economic downturns as hard. Its card members spend on average as much as three times more annually than non-members.

That makes American Express stock one you don’t want to leave home without.

Genuine Parts (GPC)

5 Great Blue-Chip Stocks to Buy
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Auto parts retailer Genuine Parts (NYSE:GPC) is a great stock to buy now.

The average new vehicle cost is at $48,334 with interest rates on a new car purchase average 6.58%. Used car average price is just over $27K with interest rates at 11.7%. It might be better than a year ago, but it’s still an historically pricey time to buy a car.

People are simply choosing to not buy new or used cars, preferring instead to keep their old jalopy running. Cox Automotive says July repair order volume dropped 7.8% at franchised dealerships in the U.S.

Genuine Parts owns the 9,600-store NAPA Auto Parts chain. Helping consumers keep their cars on the road by owner-repair is a booming business. The auto parts retailer reported record Q2 sales of $5.9 billion last week and raised its outlook for the full year.

Even better, GPC pays a dividend and has done so for 75 straight years. It also raised the payout for 67 consecutive years, making it a Dividend King. The dividend currently yields 2.5% annually. The auto parts specialist stock is one to buy.

UnitedHealth Group (UNH)

The UnitedHealth (UNH) headquarters in Minnetonka, Minnesota.
Source: Ken Wolter / Shutterstock.com

UnitedHealth Group (NYSE:UNH) should also rank high on the list of stocks to buy for downside protection in an uncertain market.

The insurer is a defensive play for your portfolio. Your health is something you just can’t go without. Doctor visits, prescription medications, and even emergency services are all necessary and remain in high demand regardless of the way the economy turns.

UnitedHealth revenues jumped 16% in Q2 to $93 billion. Insurance provides the vast bulk of those revenues (78%). But its Optum health services business is the true growth engine, as revenue jumped 25% to $56 billion. Despite being the smaller of the two arms, Optum is also more profitable. Operating margin was 6.2% versus 5.9% at the insurance business.

Also, UnitedHealth’s stock is cheap, going 17 times next year’s earnings estimates, less than twice sales, and a discounted 11 times free cash flow. The insurer also pays a dividend yielding a modest 1.5% annually that will help soften the blow of any market downdraft. Combined, it makes UnitedHealth an all-weather value stock to buy.

On the date of publication, Rich Duprey held a LONG position in GPC stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


Article printed from InvestorPlace Media, https://investorplace.com/2023/08/safe-haven-alert-3-value-stocks-to-guard-against-bull-market-uncertainties/.

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