Stocks to Beat an Economic Downturn

There's a lot of fear swirling about as investors wonder what the future holds not only for the U.S.'s economy, but for the world economy as well. With talks of Greece defaulting and causing financial troubles for Europe, and talks of a possible U.S. default, it's not surprising that investors may be wondering which, if any, stocks are safe. Although no stock can be guaranteed as "safe," there are a few that are more likely to weather this storm unscathed than others.

Safety deposit box stocks
When I think of ultra-safe stocks, I think of blue-chip companies like General Electric and IBM that have been around for a while, have highly recognizable names, and have pretty strong financials. Given that they have a history of getting through tough times before, companies that meet these criteria are in a better position to make it through economic upheavals.

As I see it, big, well-known blue chips represent relatively safe investment prospects for the future, even if the economy turns downward again. And my personal favorite among blue chips is Coca-Cola (NYSE: KO  ) .

So much more than deliciousness in a can
Though it competes Dr Pepper Snapple (NYSE: DPS  ) and Pepsi (NYSE: PEP  ) , Coca-Cola has the top-ranked brand in the business. In fact, the brand is so recognizable that studies have shown that people buy completely unrelated products like clothing just to display the Coke logo.

Add to Coke's popularity a delicious 125-year-old soda recipe that billions of people love, a strong presence in Asia and Europe, a market share of 42%, and Coke and Diet Coke taking the No. 1 and No. 2 positions for total sales, and you're looking at a highly stable company that is capable of weathering an economic storm. By contrast, Pepsi only has 29% market share, while Dr Pepper Snapple comes in at just 17%.

Coke has also seen great sales and dividend growth over the past year, which shows that even though it's a giant in its industry, it still has room to grow. Just look at Coke's sales and dividends per share growth over the past three years.

Coca-Cola 

Sales (billions)

Sales Growth From Previous Year

Dividends Per Share

Dividend Growth From Previous Year

2010 $35.1 13.3% $1.76 7.3%
2009 $31.0 (3%) $1.64 7.9%
2008 $31.9 10.7% $1.52 11.8%

Source: Motley Fool CAPS.

Blue chips and the future
Blue-chip stocks may not be the most exciting stocks to buy into, as it's highly unlikely that they're going to take off overnight and bring in massive returns. But that doesn't mean they're not some of the safest stock investments out there. And with troubled news dancing on the horizon like a puppet of doom, every portfolio could benefit from a little security.

Want more great stock ideas that are likely to withstand an economic downturn? The Motley Fool's free report "Watch This Before the Market Crashes," reveals the real threat to your wealth -- and how you can avoid it. Plus it reveals a remarkable investment one leading analyst compares to the next Intel and believes can double or even triple your investment. Click here, it's free!

Fool contributor Katie Spence thinks polar bears are adorable, but she wouldn't want to meet one in the wild. She owns shares of Coca Cola. She does not own shares of any other company mentioned above. The Motley Fool owns shares of IBM, Coca-Cola, and PepsiCo. Motley Fool newsletter services have recommended buying shares of Coca-Cola and PepsiCo, as well as creating a diagonal call position on PepsiCo. 

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

DocumentId: 1528520, ~/Articles/ArticleHandler.aspx, 8/1/2014 6:57:07 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement