The carnage in the stock market in less than 30 days is unprecedented. Declines of 1000 points seemingly every other day, the biggest point drop in the history of the markets, a 1000-point decline in the S&P 500 in less than a month. The devastation goes on and on, and many investors are very nervous, and with good reason.
This will end and the markets will trade back up at some point. A new report from Stifel’s top-flight equity strategist, Barry Bannister, makes the case that while the bottom could be right around the 2,300 level on the S&P 500, due to the swift velocity of the selling (the index actually traded below that level on Wednesday before a late rally), he feels it could take five years to get back to 3,000.
As we have learned after every massive black swan event, be it 9/11 or the crash and global financial crisis in 2007 and 2008, there is always a vast amount of money made by investors with huge stores of cash, like Warren Buffett did in 2008. We started checking on companies that are doing well now as a result of the unprecedented situation we find ourselves in.
We found five stocks that are faring very well and still could be a safe place for stunned investors. All are rated Buy at top Wall Street firms.
Clorox
Needless to say, bleach has been in demand, and so are the other products this company sells. Clorox Co. (NYSE: CLX | CLX Price Prediction) is a diversified manufacturer and marketer of household products, specialty food items and pet care items. Well-known brands include Tilex, Liquid Plumr, 409, Pine-Sol, Kingsford, Glad, Brita, Hidden Valley, KC Masterpiece, Burt’s Bees and Fresh Step.
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Wall Street has been breathlessly raising estimates for the company. The third-quarter earnings estimate has been raised to $1.42 per share, up from the previous consensus estimate of $1.40 per share, as have the full-year estimates for 2020 and 2021. The 2020 estimate has been raised to $6.24 per share from the previous consensus estimate of $6.21 per share, and the full-year 2021 estimate has been increased from $6.51 per share to $6.58.
Investors receive a 2.06% dividend. JPMorgan recently upgraded it to Overweight with a $185 price target. The Wall Street consensus target is $157.92, but Clorox stock has blown through those levels and closed Wednesday at $190.95, down 3.5% on the day.
CVS
This top stock may still be offering an excellent entry point. CVS Health Corporation (NYSE: CVS) is one of the largest health care companies in the United States, providing retail, mail and specialty pharmacy dispensing services and pharmacy benefits. Upon the completion of its acquisition of health care giant Aetna, CVS became one of the most vertically integrated publicly traded health care companies.
Last week the company announced it will acquire and operate 99 Schnucks retail and specialty pharmacies in the Midwest while also acquiring the pharmacy files from an additional 11 stores. CVS Health will transfer the acquired pharmacy prescription files to nearby CVS pharmacy locations. Schnucks is a family-owned grocery and pharmacy retailer with 112 stores and 13,500 employees, which according to the company’s website appears to include specialty pharmacy locations currently. Schnucks primarily operates pharmacies in Missouri, Illinois and Indiana, among others.
Investors receive a healthy 3.45% dividend. Merrill Lynch has set an $86 price target for the shares, which compares with the consensus target of $84.25. CVS Health stock was last seen trading at $57.18 a share.
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Kimberly-Clark
Without a doubt, this tumultuous time will be remembered for the run on toilet paper, and the empty shelves, and this company should be a big winner. Kimberly-Clark Corp. (NYSE: KMB) is a manufacturer of tissue, personal care, and health care products. Global brands include Huggies, Kotex, Kleenex, Cottonelle, Viva, Scott, Depend and Poise, as well as Andrex in the United Kingdom.
In addition to the concerns over shortages of products, the company also looks poised to benefit from a longer and more severe allergy season expected this year, particularly in the eastern United States, due to warmer temperatures and above-average rainfall. The company also raised its dividend for 2020 by 3.9% to $1.07 per share.
The dividend increase now means a tempting 3.18% yield. The $155 Merrill Lynch price objective is above the $141.15 consensus price target. Kimberly-Clark stock closed at $134.35 on Wednesday after retreating almost 7%.
Kroger
This top grocer does almost all its business in the United States, and it is desperately trying to hire more workers to keep up with demand. Kroger Co. (NYSE: KR) is the second-largest U.S. food supermarket retailer and generates $120 billion in annual sales. Kroger operates roughly 2,800 supermarkets throughout 35 states and under two dozen banners. Kroger also sells fuel at 1,450 supermarket fuel centers and operates 2,268 pharmacies and 274 jewelry stores.
Analysts note that the company’s price leadership, strong management team, store execution and impressive leveraging of technology partnerships and investments (including a recently announced partnership with Ocado) should support Kroger’s revenue outlook and help drive efficiency.
Shareholders are paid a 1.88% dividend. Merrill Lynch has set a $37 price target. The posted consensus target is $33.22, and Kroger stock closed Wednesday at $33.91. That was just shy of a 3% gain for the day.
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Procter & Gamble
The stock offers a very solid dividend and safety. Procter & Gamble Co. (NYSE: PG) is one of the world’s largest consumer products companies, and it operates in five segments: Beauty, Grooming, Health Care, Fabric & Home Care, and Baby & Family Care. Its many brands include Pampers, Tide, Bounty, Charmin, Gillette, Oral B, Crest, Olay, Pantene, Head & Shoulders, Ariel, Gain, Always, Tampax, Downy and Dawn. Some of these are among the most valuable brands in the world.
The company actually is innovative in its product development process and uses that to help ensure future growth and cash flow. This should provide investors years of steady growth and dividends, plus a safe place to roost now given the extreme volatility.
Shareholders receive a 2.53% dividend. The Merrill Lynch price objective is $140 and the analysts’ consensus target is $129.05. Procter & Gamble stock closed most recently at $117.45 per share.
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The key for investors looking to add these top stocks to portfolios is to scale buy shares, rather than buying a large position all at once. While the coronavirus scare is similar to past health-related events, we still don’t know how things will play out, so better to be safe rather than sorry. With that said, these companies are benefiting and should continue to, for at least the short term, and most likely the long term as well.
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