4 “Essential” Stocks for the Times

My state of Illinois is initiating “Shelter in Place” rules today. The basic idea is that they are demanding that all citizens quarantine themselves and only “essential” stores and companies should remain open. These rules will likely spread across the country state by state.

Obviously on the list of essential stores includes all kinds of food and household items we need to remain at home. So as investors it is wise to have a focus on these kinds of stocks that are benefiting from this stock up trend.

Here are 4 such stocks that to consider for your portfolio at this time: Costco (COST), Clorox (CLX), Kimberly-Clark (KMB), and Proctor & Gamble (PG).

Costco Wholesale Corporation (COST)

COST sells the household goods we all need in bulk and at lower prices. The operative word in the preceding sentence is need.  Consumers are hesitant to spend on luxury items they desire in these troubling economic times.  However, the masses are more than willing to spend their limited dollars on necessities such as those sold by COST.

COST sales in the month of February soared more than 12% compared to the same month in the year prior.  Some investors question whether COST will continue its winning ways if consumers were quarantined for an extensive period of time.  However, even if a nationwide quarantine is enforced and fewer people shopped at COST brick-and-mortar stores, the company would still rake in the cash as it has a robust e-commerce business.

More importantly, Costco is a stock with a long track record of earnings growth and share price gains. So looking beyond the short term concerns of the Coronavirus, COST is a stock that makes sense in a lot of investor portfolios.

Proctor & Gamble Company (PG)

PG might be the most recession-resistant stock in existence.  PG makes the household necessities we all use on a daily basis.  This consumer staples stock might not skyrocket amidst the coronavirus outbreak yet it should gradually inch upward or, in the worst case scenario, move sideways.  As experienced investors know, consumer staples stocks such as PG typically perform quite well amidst economic uncertainty.

The only potential negative to PG is faltering economic conditions in developing countries where its goods are sold.  However, the company has a proven business model, increasing cash flow and a solid balance sheet.  The bottom line is people will continue to need laundry detergent, toilet paper, toothpaste and other household necessities, making PG a nearly recession-resistant investment.  The company will continue selling such basic-need items with ascending margins as demand spikes throughout the duration of the coronavirus pandemic. And just for good measure investors can rely upon PG’s 2.9% dividend yield which they have increased for over 60 years. That is about as recession resistant as you can get.

Kimberly-Clark Corporation (KMB)

KMB has performed quite impressively as the coronavirus sweeps across the land.  This toilet paper-maker is trading around a 20 multiple of its expected earnings.  KMB’s dividend yields about 3.5%, exceeding that of other safe-haven picks like Walmart (WMT) as well as the aforementioned PG.

Analysts anticipate KMB earnings will grow by nearly 6% across the next half-decade.  Demand for the company’s Cottonelle toilet paper will continue to be quite strong as consumers around the globe continue to purchase toilet paper like never before.  KMB brands also include:

• Huggie’s diapers
• Depends pads
• Kleenex tissues
• Scott’s paper towels

Each of the items listed above will still be in demand no matter how bad the economy gets.   In other words, KMB is a solid investment for the present times…and the years ahead.

Clorox Company (CLX)

CLX has quickly become a stock market superstar with shares up 16.3% on the year while most other stocks are well into bear market territory.  That’s because consumers across the globe are scooping up Clorox bottles in an attempt to disinfect their living and working spaces in the seemingly never-ending battle against the coronavirus.

More than one-third of CLX’s products are cleaning supplies.  Though the sales of such cleaning supplies were flat in recent quarters, these figures are spiking as a result of the coronavirus pandemic.  In fact, there is such a shortage in stores that my wife went on e-Bay to buy a package of 4 bottles of wipes for about 5X the normal price. Add in the fact that CLX executives have spearheaded a cost-savings push to mitigate overhead expenses in the years to come and a stake in CLX becomes that much more attractive.

Want more great stock picks? Then check out these additional resources:

3 “Stock Up” Stock Winners

All POWR Rating A (Strong Buy) Stocks

Reitmeister Total Return portfolio – Discover the hedged portfolio strategy that Steve Reitmeister used to produce a +5.13% gain last week while the S&P 500 fell by -14.97%.

COST shares closed at $290.42 on Friday, down $-14.80 (-4.85%). Year-to-date, COST has declined -0.98%, versus a -28.91% rise in the benchmark S&P 500 index during the same period.

About the Author: Steve Reitmeister

Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More…

More Resources for the Stocks in this Article