|
Answer:
Dear
BuyandHolder,
We’d all like to have the wisdom to know precisely when stock prices will stop declining and come roaring back. Yet that’s impossible, even for the most expert among the experts. In thinking about it, however, you might keep in mind that the during the bear market of 2002, the S&P 500 sank to a low of 776. Yesterday, October 30, 2008, it closed at 954.09.
Although it’s impossible to spot the market’s bottom, it is possible to spot industries that are likely to hold their own -- both during economic downturns and also as the market steadies itself and takes on a sporadic if not permanent upward turn.
There’s no guarantee regarding any of these industries but now would be a good time to start your research, selecting the top two or three in each sector. You can do so by reading the independent research reports on over a thousand stocks published by Value Line Investment Survey (www.valueline.com) and then tracking the third and fourth quarterly reports.
$TIP: If you miss a company’s earnings report on the air or in the newspaper, simply Google the stock’s name followed by a comma and “third quarter”.
Beverages. Sales of alcoholic and nonalcoholic drinks tend to remain strong during economic instability. Beer sales often outshine those in the hard liquor category. Sales of expensive customized soft drinks, fruit mixtures and coffees are unlikely to hold their own.
Drugs. People continue to buy medicines and over-the-counter drugs. Generic brands are particularly popular.
Food. This huge industry includes food production, processing and distribution as well as supermarkets and other retail outlets. High-priced gourmet-type products, however, tend to suffer. Bread, milk, orange juice, cereal and coffee, among other items, continue to move off the shelf.
Household Products. Soap, toothpaste, toilet paper and personal-care products are necessities, along with household cleaning products for washing clothes, dishes, sinks, tubs and floors. Lower-priced and generic items post better sales than specially marketed items.
Telephone & Telecommunications. Not all stocks within this group should be regarded as recession-proof or even recession resistant. Study debt level and sales figures carefully.
Utilities. In all phases of the business cycle, there’s a steady, reliable demand for water, electricity, oil, gas and coal. No one voluntarily wants to sit in the dark, roast in the summer, be shivering in the winter. Yet as with the telecommunications industry, not all utilities thrive equally. Those with a large component of industrial users may suffer – if businesses start to cut back.
Note: This past week, several of the oil and gas companies posted impressive third-quarter results.
Waste Disposal. Garbage collectors and certain companies whose activities are mandated by the government, such as hazardous waste disposal, offer services needed at all times.
Good luck!
BUYandHOLD does not recommend any securities. The industries mentioned above are being used for illustrative purposes only and should not be regarded as an offer to sell or as a solicitation of an offer to buy. |
