Jami Dimon is one of the most respected minds on Wall Street.
The JPMorgan Chase (JPM -0.48%) CEO not only leads the biggest bank in the country by assets but also famously led his bank though the 2008 financial crisis and did not need to be rescued by the government, though it did participate in the Troubled Asset Relief Program (TARP).
Given his experience and his position, investors tend to pay attention to what Dimon has to say, so it was notable when he warned of the bond market "cracking."
At the Reagan National Economic Forum earlier this month, Dimon predicted that the bond market would crack, blaming excessive deficit spending and a large debt for pressuring interest rates higher as the 10-year yield is hovering at levels not seen since 2007.
If you're looking for stocks that will help protect you from a cracking in the bond market, keep reading to see three that can do just that.
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1. Philip Morris International
Philip Morris Intenational (PM 0.99%) is well equipped to thrive no matter what happens with the bond market for several reasons.
First, the stock gets nearly all of its business from international markets, so it's less exposed to the typical S&P 500 stock.
Second, the company sells tobacco products and related next-gen products like Zyn oral nicotine pouches. Those are typically seen as recession-proof products since consumers buy them regardless of the state of the economy. In other words, bond rates are unlikely to affect demand for the product.
Additionally, the company has delivered strong results across the business, especially with its next-gen business, made up of products like Zyn and its IQOS heat-not-burn devices. The next-gen category now makes up more than 40% of its revenue and gross profit, showing it can still deliver growth despite competing in the mature tobacco market.
2. AutoZone
Like Philip Morris, AutoZone (AZO 2.43%) has proven its ability to deliver results even in a recessionary environment. In fact, AutoZone, like other aftermarket auto parts, is countercyclical, meaning it tends to do better when the economy is weak.
That's because in weak economies, consumers choose to avoid buying new cars and instead spend money on repairs, which favors retailers like AutoZone.
In addition to the nature of the business, the company also has a long history of outperforming the market thanks to its hub-and-spoke store model whereby larger nearby stores can support and supply smaller stores, helping to ensure that all stores are fully stocked.
Given that it benefits from a delay in new car purchases, the stock should do fine if the bond markets break.
3. Dollar General
Dollar General (DG 1.74%) is another good candidate for a stock that can withstand any fallout in the bond market.
Like AutoZone, Dollar General has a history of outperforming during weak economies as consumers tend to "trade down," meaning shoppers who would typically go to more expensive stores shift their shopping to Dollar General. In fact, Dollar General said it was already starting to see some higher-income customers shop in its stores due to concerns about tariffs and the general pressure on the economy.
During past recessions and other challenging economies, such as the financial crisis and the pandemic, Dollar General's results soared.
The company also benefits from earning nearly all of its revenue from consumer staples like food, paper products, and cleaning products.
With a focus on low prices, small pack sizes, and convenient locations with more than 20,000 stores across the country, Dollar General looks like an easy stock to own if the bond market starts to crack as Dimon predicted.
