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Mortgage default rates are soaring in front of the biggest U.S. pullback in consumer spending in decades. The days of easy credit are O-V-E-R. Home prices recently produced their sharpest decline on record. And jobless claims have surged to a 26-year high.
But now is not the time to panic.
Despite my most jaundiced look at the storm clouds advancing over the U.S. economy, I’ve sorted out a number of promising places for you to ride out the turbulence with comfort…and a considerable promise for profit.
Here are seven stocks that can buck this recession.
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Stock #1: ConAgra ()
Even with the U.S. economy in trouble, there is one thing that you can count on people purchasing — food.
ConAgra () is one company that should benefit from this trend. CAG is the leading branded food company with some pretty familiar products, including Healthy Choice, Chef Boyardee, Egg Beaters, Hunt’s, Orville Redenbacher, PAM and Banquet.
I’m betting that a number of these brands can be found in your cupboards and refrigerators. CAG’s consumer brands can be found in 96% of U.S. households. The company has also expanded its reach to outside of the U.S. with its international food segment supplying 40 global brands to 110 countries, including Canada, Mexico, Japan and China.
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Stock #2: Nestlé ()
Another consumer staples company that should perform well is Nestlé (). Yep, chocolate is just what people need to calm their nerves during volatile times. In late 2007, Nestlé purchased the Ruzskaya Confectionery Factory, which makes the Comilfo and Ruzanna brand chocolates in Moscow. Russia’s chocolate consumption is booming — all that vodka must need a chaser. Chocolate company Barry Callebaut predicts consumption will grow 32% by 2011. But there’s more to Nestlé than just its popular chocolate brands, Kit Kat and Butterfinger.
Based in Switzerland, Nestlé was founded in 1866 and has grown into the world’s biggest food and beverage company. It has factories in practically every country in the world. It produces coffee, water, ice cream, infant nutrition products, soups, pastas, frozen foods and even pet care products. Some of Nestlé’s familiar brands include: Nescafe, Poland Spring, Nesquik, Carnation, Edy’s, PowerBar, Stouffer’s, Lean Cuisine, Toll House and Purina.
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Stock #3: J.M. Smucker ()
J.M. Smucker () is a quiet family-run business that has grown for over 108 years to become a leader in the consumer goods sector.
It is the leading marketer and manufacturer of fruit spreads, peanut butter, shortening and oils, ice cream toppings, sweetened condensed milk and health and natural foods drinks. Some of its brands include: Crisco, Pillsbury, Hungry Jack, Robin Hood, Eagle Brand, Smucker’s and Jif.
Conservative Smucker’s has around $200 million in cash and equivalents, and a dividend has been paid annually since 1949. “With a name like Smucker’s, you have to be good.”
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Stock #4: PepsiCo ()
PepsiCo () is the world leader in convenient foods and beverages. This is not surprising, as PepsiCo has a large range of popular brands filling its portfolio, including Lay’s, Ruffles, Doritos, Tostitos, Fritos, Cheetos, Rold Gold, Pepsi, Mountain Dew, Slice, Gatorade, Propel, Tropicana and Quaker. Plus, they’re available in 200 countries.
PepsiCo has been around a long time, founded in 1965 when Pepsi-Cola merged with Frito-Lay. Under CEO Indra Nooyi’s careful guidance, PepsiCo has made some smart decisions over the years including its acquisition of Tropicana in 1998 and merger with Quaker in 2001. During her tenure, PepsiCo has also made strategic alliances like its North America Coffee Partnership with Starbucks. This partnership recently expanded to China, where Frappuccinos will be sold throughout PepsiCo’s distribution network.
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Stock #5: Sysco Corp. ()
Sysco Corp. () is the global leader in selling, marketing and distributing food products to restaurants, healthcare and educational facilities, lodging establishments and other customers that prepare meals away from home. It provides not only the ingredients used to prepare the meals, but also preparation and serving items.
Today, the company has about 400,000 customers, and it operates in over 170 locations in the United States and Canada.
Sysco boasts an industry-leading 15% of the highly fragmented $225 billion foodservice and hotel amenity market. For the fiscal year 2008, Sysco had $37.5 billion in sales.
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Stock #6: Hormel Foods ()
For the past nine years, Hormel Foods Corp. () has been named one of “The 400 Best Companies in America” by Forbes.
This is no surprise. Since the company’s founding back in 1891, Hormel has been a leader in the processing and marketing of pork. Now it has grown into a multinational manufacturer and marketer of brand-name food and meat products.
Hormel’s products include: hams, bacon, sausages, franks, canned luncheon meats, stews, chilis, hash, meat spreads, microwaveable entrees, salsas and frozen foods. Some of the company’s familiar brands filling shelves at local grocery store range from SPAM to Chi-Chi’s to Jennie-O Turkey.
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Stock #7: Coca-Cola ()
Dividend-paying big blue-chip exporters, like Coca-Cola (), are also one of my favorite groups right now. Nearly 30% of U.S. corporate profits come from abroad today, and as foreign contributions continue to expand, you can bet that Coca-Cola will be one of the primary beneficiaries.
The company has businesses in 200 countries, where almost 90% of their beverages are produced by local people and resources. Coca-Cola, like PepsiCo, has a vast portfolio of products — it offers more than 2,600 beverages, including juices and juice drinks, sports drinks, energy drinks, teas, coffees and water. Its familiar brands include: Sprite, Canada Dry, DASANI, Dannon, Dr. Pepper, Fanta, POWERade and Minute Maid.
Coke is an outstanding business, with one of the most valuable brands in the world. If you include dividends on Coke and on the S&P 500, Coke has kept pace with the market since year-end 1999. And in 2007, Coke was up 30% with dividends versus a return of only 5.5% on the S&P 500.
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19 More Winning Stocks
There won’t be many stocks that will thrive in this tumultuous environment, but the ones that do thrive will do extremely well — including the list I’ve outlined today. They have fat dividends, growing operating margins and their earnings are accelerating. But above all, their business is not tied to the health of the U.S. economy.
There are 19 additional winning companies I can give you chapter and verse on in an economic report called The 26 Winners of 2009. In it, you’ll find complete details on the companies discussed today as well as the full story on 19 more winning stocks. Best of all, it’s yours FREE with a risk-free trial subscription to Intelligence Report.
This list exemplifies every principle of investing I hold dear and that has enabled my Intelligence Report subscribers to thrive and has enabled me to never, ever have a losing year in almost three decades.
