Companies and Brands

4 Ultra-Safe Stock Picks as Market Becomes Dangerously Overbought

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While the market continues to roll on to record highs, one thing is becoming ever more evident: Turning to the bond market is hardly a safe alternative to equities, and while the prices of government and investment grade debt have come down some, interest rates are still trading near generational lows.

In a new research report, Merrill Lynch is out with its top food and beverage picks, and while the sector may not seem like the most exciting to investors, the companies exhibit much lower volatility, and some in the group benefit big time from the cheaper U.S. dollar.

We selected four that should benefit from the lower dollar as they have larger foreign sales, all are rated Buy at Merrill Lynch.

Coca-Cola

This company remains a top Warren Buffet holding and offers not only safety, but an incredible strong worldwide brand. Coca-Cola Co. (NYSE: KO) is the world’s largest beverage company, refreshing consumers with more than 500 sparkling and still brands.

Led by Coca-Cola, one of the world’s most valuable and recognizable brands, the company’s portfolio features 20 billion-dollar brands including Diet Coke, Fanta, Sprite, Coca-Cola Zero, vitaminwater, Powerade, Minute Maid, Simply, Georgia and Del Valle. Globally, it is the number one provider of sparkling beverages, ready-to-drink coffees and juices and juice drinks.

Through the world’s largest beverage distribution system, consumers in more than 200 countries enjoy Coca-Cola beverages at a rate of more than 1.9 billion servings a day. With coolers getting packed for picnics, parades and vacations you can bet that they will be stuffed with products from this iconic American company. Also remember that the company also owns 16.7% of Monster Beverage, which continues to deliver big numbers. And the company posted solid-second quarter results recently.

Coca-Cola investors receive a 3.24% dividend. The Merrill Lynch price target for the stock is $50, while the Wall Street consensus target is $45.68. The stock closed Tuesday at $45.70.

Kraft Heinz

This consumer staple stock makes sense for nervous investors. Kraft Heinz Co. (NYSE: KHC) is the third-largest food and beverage company in North America and the fifth-largest in the world, with eight $1 billion+ brands. A globally trusted producer of delicious foods, Kraft Heinz provides high quality, great taste and nutrition for all eating occasions whether at home, in restaurants or on the go.

The company’s iconic brands include Kraft, Heinz, ABC, Capri Sun, Classico, Jell-O, Kool-Aid, Lunchables, Maxwell House, Ore-Ida, Oscar Mayer, Philadelphia, Planters, Plasmon, Quero, Weight Watchers Smart Ones and Velveeta.

Consumer staples are expected to continue to do well this year, and this is one of the top companies in the sector. The company reported very solid earnings, and analysts across Wall Street are generally bullish on the potential for solid earnings continuing through 2017 and beyond.

Shareholders receive a 2.77% dividend. Merrill Lynch has a $100 price target, and the consensus target is $90.29. The shares closed Tuesday at $86.67.

Molson Coors

While the iconic American beer company did merge with a Canadian beer giant, it is still based in Denver. Molson Coors Brewing Co. (NYSE: TAP) is one of the world’s largest brewers (more than 3% global share) with core brands Coors Light, Carling, Molson Canadian and Staropramen. Molson and Coors merged in February 2005, added StarBev in 2012 and serves markets including the United States, Canada, Eastern Europe and the United Kingdom and Ireland, with exposure to other markets through its Molson Coors International division. It acquired the remainder (58%) of the U.S. joint venture (MillerCoors) in mid-October 2016.

The Coors Light brand remains a huge favorite with Generation X and baby boomers who were all around when the light beer revolution started. With the NFL season right around the corner, you can bet that promotional activity will spike, as the company is a big advertiser.

Shareholders receive a 1.9% dividend. The $110 Merrill Lynch price target compares with the consensus target of $103.42. The shares closed trading on Tuesday at $89.19.

Pinnacle Foods

Merrill Lynch analysts feel this company has the potential to show faster relative growth to peers. Pinnacle Foods Inc. (NYSE: PF) is a leading branded packaged food company in the United States and holds the top or number two market share in major categories it competes in. The company’s main categories include frozen vegetables, baking mixes and pickles. Its iconic brands, such as Birds Eye and Duncan Hines, can be found in more than 85% of U.S. households.

The company posted very solid second-quarter results, with the analysts citing strong underlying fundamentals as Pinnacle is driving top-line growth through innovation. While they slightly lowered fiscal 2017 earnings per shares estimates, they remain positive on the outlook for 2017 and beyond.

Shareholders receive a 1.93% dividend. The Merrill Lynch price target is $65, the same as the posted consensus target. The shares closed Tuesday at $59.15.

Four very safe stocks for investors to consider as the market races higher. All pay dependable dividends and have solid growth potential. While none will be confused with momentum leaders, they all should do well if the market takes a big tumble.

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