Investors are worried that the stock market’s first-half performance in 2023 is reversing. It’s unclear what part of the business cycle we are currently in. That means investors need to be very careful and consider stocks for any market condition. If we are entering a further slowdown or a recession I’d suggest extra conservatism makes sense.
Capital preservation is the name of the game. That doesn’t mean that investors have to lose hope for capital appreciation even in a worst-case scenario.
The current market does suggest a slowdown and that means investors should consider past business cycles to inform their strategy. So here are stocks for any market condition you should consider buying if you are worried about a market downturn.
Dominion Energy (D)
Utilities stocks like Dominion Energy (NYSE:D) tend to do moderately well across all portions of the business cycle. Of the nine sectors, they are among the least volatile and tend to hold value well. That hasn’t been the case lately. In fact, utilities stocks are performing very poorly.
Headlines abound with the news that currently high bond yields have made utilities stocks drop in value. Yields are approaching 5% essentially rendering utilities dividends unattractive. Why settle for a smaller dividend that can be slashed when bonds are guaranteeing 5%? Fair enough.
The answer is that in most cases it makes sense to pursue bonds now. However, consider that D stock is yielding 6.5% through its dividend. It’s solid: It was last reduced in 1984 and Dominion recently sold its natural gas business for $9.4 billion and is flush with cash.
Dominion is moving with the times. Regulators are clamping down on natural gas and instead of fighting Dominion has simply pivoted into new segments. The firm proposed new solar projects to its shareholders in early October. Its dividend beats bonds and it is pivoting into growth. There’s a lot to like overall. This makes it one of those stocks for any market condition.
Morgan Stanley (MS)
Morgan Stanley (NYSE:MS) is a financial stock which is a sector that offers very middle-of-the-road performance in general. That said, Morgan Stanley currently has momentum on its side and is exhibiting signs of strong performance.
One reason to believe that will continue is that the company may be setting up to gain strength in 2024. The investment banking firm is seeing emerging signs of strong M&A activity. Morgan Stanley made those comments before the most recent Fed meeting. The firm hasn’t updated those comments since leading me to believe that the view remains unchanged.
It’s easy to get behind MS stock given simple ideas like an upside based on Wall Street sentiment and a dividend yielding 4.3% at present. If this is a slowdown right now, investors should expect Morgan Stanley to do well. Capital tends to rush into big M&A firms when things go south. The expectation is that all of the leverage at these firms can be used to scoop up inexpensive assets in the downturn that appreciate and get sold for gains later.
Coca-Cola (KO)
Coca-Cola (NYSE:KO) stock recently fell on news that the popular weight loss drug Ozempic is impacting sales. Some early data suggests that consumers begin to avoid high-calorie foods like soda once they begin taking the drug. The effect is so strong that the packaged food and beverage industry is taking notice.
There are a few things to note here. Firstly, Ozempic isn’t without complications. Reports of multiple health-related issues emerged earlier in the year and its long-term effects remain unknown. It’s absolutely certain that food companies are going to direct significant resources toward those issues now. Expect a quiet battle to emerge. Still, it’s part of those stocks for any market condition.
The other thing to note is that Coca-Cola now has even more incentive to pivot toward healthier products. Consumers have been demanding healthier alternatives to soda for a while and the company has responded. Beverages that include probiotics and prebiotics are popping up on shelves everywhere and they aren’t cheap. That isn’t to say Coca-Cola can easily replace the profits its sugary drinks provide. However, I don’t think Coca-Cola will have to do so because of Ozempic because weight loss breakthroughs always come with a gotcha later. That’s a feeling admittedly but history tends to repeat.
Medtronic (MDT)
Medtronic (NYSE:MDT) is a medical equipment firm and healthcare stocks tend to do very well as market conditions worsen. The reason is relative demand inelasticity. Consumers tend to require access to healthcare in all stages of the business cycle. A man with diabetes requires insulin in any market but he can forgo refinancing his mortgage when rates rise.
That simple truth is why most healthcare stocks tend to have very low betas. Medtronic is no exception with a beta of 0.72. In my mind, defensive stocks have a lot of resilience at the moment. There’s nothing particularly exceptional about Medtronic based on its historical metrics.
Revenues were up during the most recent quarter but earnings fell as expenses ate into the bottom line. The positive news is that the firm increased its organic revenue guidance to 4.5% from a previous range of 4-4.5%. That should give investors some confidence.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) sells energy drinks that have become very popular. They’re low-calorie and contain energy-boosting vitamins and minerals along with caffeine. It’s definitely one of those stocks for any market condition you should consider buying.
The company is booming in 2023. Revenues more than doubled in the second quarter, reaching $325.9 million and net income increased more than five-fold to $51.5 million. The company’s drinks are available in many retail locations and personally speaking, they’re good. It’s no small feat to capture retail space in big box stores and retail locations where competition is very high.
Celsius is a consumer staples firm and consumer staples shares are notoriously strong in weak markets. CELH shares benefit from that classification but are firmly growth shares at the same time. Revenues have basically been doubling for the last 3 years. Celsius is projected to make $1.25 billion in sales this year and $1.75 billion in 2024. It has reached a growth peak but that’s no reason to suddenly ignore it and price projections indicate the same.
Visa (V)
Visa (NYSE:V) is going to continue to do well. If you’ve been following the stock over the last year a lot of this will sound familiar. Cross-border travel is strong and processing fee growth is expected to continue to be strong. It feels like a contradiction in some sense. We are continually bombarded with news that things are getting worse and that consumers are running out of savings.
It all suggests that travel should slump, having a negative effect on international travel. Current expectations are that Visa’s revenues are going to grow by more than 11% in 2023. I believe some of the growth also has to be originating from cash-strapped cardholders who are using their cards to pay for necessities as well. That leads to financing charges that are becoming more expensive seemingly by the day. It sets up a greater income stream for Visa moving forward which only strengthens the case favoring V stock as an investment.
Patterson Companies (PDCO)
Patterson Companies (NASDAQ:PDCO) is a firm that provides dental and veterinary products and services. Roughly two-thirds of its $1.6 billion in revenues originates from its veterinary segment and shares include a dividend yielding 3.6%.
What is particularly attractive about Patterson Companies is that it is well run overall. Even though sales were relatively flat in Q2, growing by a modest 3.5%, earnings per share increased by 28%. This makes it one of those stocks for any market condition.
The company reaffirmed its earnings guidance for the entire year. That’s the type of confident signal that investors appreciate in these shaky markets. Quick math suggests that PDCO shares can create strong returns for investors. Including a presumed $1.04 in dividends, PDCO shares have a 25% upside over the next 12-18 months. It’s another play on the safety of healthcare stocks overall as trepidation ripples throughout the markets. It isn’t a well-known firm but that shouldn’t stop investors from considering PDCO shares.
On the date of publication, Alex Sirois 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.