An investor's dream is to find a stable, well-managed stock with growth prospects. Why not have three stocks that do just that? Although they may be involved in completely different business models, PayPal (NASDAQ:PYPL), Clorox (NYSE:CLX), and Disney (NYSE:DIS) all offer this coveted balance.
These three well-known and dominant companies in their respective industries might be priced near their 52-week highs, but when the chips are down, they're businesses you can count on to weather a downturn or even a recession, making them worth their premium.
Let's start with PayPal, a financial services company that focuses on digital and mobile transactions, typically between a business and a consumer or between two individuals. The company doesn't act as a bank, but users can get a PayPal cash card, a debit card linked to a user's PayPal balance.
PayPal has garnered a lot of attention lately for Venmo, the peer-to-peer (P2P) payment app. In PayPal's Q2 2019 earnings call, its president and CEO, Dan Schulman, told investors that Venmo's total payment volume (TPV) had increased 70% year over year to $24 billion. The company expects nearly $100 billion in TPV by year end just from Venmo. Instant withdrawals account for half of Venmo's monetization, while Venmo cards and Pay with Venmo make up the other half.
PayPal's strategy is to use Venmo as a means of incorporating users into its network of services. Although Venmo still makes up a minority chunk of PayPal's revenue, it has added significantly to PayPal's TPV and total active accounts. PayPal now has 286 million active accounts on its platform, including 23 million merchants. It added a record 41 million net new actives in the last 12 months. The transactions themselves are usually quite small on Venmo, but sheer volume means the payment application made up a surprising $24 billion of PayPal's $172 billion TPV in the most recent quarter, or 14%.
Moving on to Clorox. Clorox is a consumer defensive stock known for bleach and Clorox wipes. The $20 billion market cap company operates through four main segments: cleaning, household, lifestyle, and international.
Clorox does a lot more than you think. Brita water filters, Burt's Bees natural cosmetics and personal care products, Glad storage bags and containers, and Kingsford charcoal, among others, are brands under the Clorox umbrella. Clorox is an attractive investment during a recession due to its focus on domestic markets, steady growth despite economic cycles, and diversified business model. The company pays a 2.6% dividend as well.
Finally, Disney. Disney has built what is quite possibly the most dominant and influential entertainment powerhouse of the 21st century. Disney owns ABC, Marvel, Lucasfilm, Fox, Touchstone Pictures, an 80% stake in ESPN, and more. Between entertainment and its famous parks across the globe, the company makes so much profit that although the stock is up around 30% in 2019 and is close to an all-time high, Disney still has a below-market-average P/E of just 18.
Disney+, the company's streaming service, is launching Nov. 12 and starts at just $6.99 a month. Disney+ with ESPN+ and ad-supported Hulu will cost just $13 a month, which is the same price as Netflix's most popular tier and $5 less than the three services would cost if paid for individually.
Disney dominates the box office. Avengers: Endgame, the live-action Lion King, Toy Story 4, and Captain Marvel, in that order, headline the four top-grossing movies of 2019. Aladdin ranks sixth. Together, the five movies have raked in over $2.6 billion in sales as a result of over 287 million ticket sales, placing the average ticket cost at around $9.
Disney's strong international reach, loyal following, and diversified asset portfolio make the company as about as recession-proof as you can get without paying a premium valuation.
On the outside, PayPal, Clorox, and Disney have almost nothing in common, but that's exactly what makes this trifecta so attractive. Different business models, different customers, different management, yet all three companies are positioned perfectly to weather a recession. Investors looking for companies that can grow and even outperform a bull market, but also hold up during a bear market, need look no further.