With the game of preserving as much value as possible in your portfolio on the line, investors ought to move into a “prevent” defense with steady stocks for uncertain times. To extend the football analogy, you’re not so worried about garbage yards in front of you but rather preventing the big score behind you. Of course, you don’t want to be too slack with your prevent defense; otherwise, you’ll prevent yourself from winning.
Not to bring up bad memories but that’s basically what happened to the Atlanta Falcons in Super Bowl LI. So, each of the “safe stocks” in this list below will feature a range of analyst price targets.
To clarify, just because you target so-called steady stocks doesn’t guarantee you success. However, with stubbornly high inflation continuing to apply pressure on consumer sentiment, it may be best to take a conservative approach. Should circumstances improve, you can always ramp up the risk-reward volume. And with that, below are stocks for uncertain times.
As a property and casualty (P&C) insurance giant, Allstate (NYSE:ALL) effectively carries a captive audience. Sure, in very limited jurisdictions, you can drive around without auto insurance. And you can buy a home and refuse home insurance (or only buy very limited coverage). However, given the terrible circumstances that can materialize out of nowhere, lacking insurance is imprudent, to say the least.
Therefore, based on necessity and plain common sense, ALL ranks among the steady stocks for uncertain times. On a fundamental note, it could be the most ideal investment for such a directive. After all, insurance is about protecting against uncertainties.
Now, on a financial note, I’m not going to sit here and tell you that Allstate levers a sterling print because it doesn’t. However, it benefits from consistently strong free cash flow (FCF) on an annual basis. It also offers a forward yield of 2.85%. Analysts rate ALL a moderate buy though the price target of $128.92 only represents 3% upside. So, you’re talking maximum protection for limited upside.
Republic Services (RSG)
If you want safe stocks for uncertain times but also want some juiciness, consider Republic Services (NYSE:RSG). A waste disposal company, Republic isn’t exactly a sexy enterprise. Instead, it’s a downright ugly business. But here’s the thing – someone’s got to do it. What’s more, as the U.S. population grows through births and immigration, consumption will increase. And that inevitably translates to more waste that needs disposal.
In my opinion, it’s simple math. For a slightly more complex but enticing calculation, investors should turn to Republic’s financials. First, the company’s three-year revenue growth rate comes in at 10.1%, ranked above 60% of its peers. Its FCF growth rate during the same period also impresses at 15.5%.
Second, as you might expect, Republic represents a consistently profitable enterprise. Featuring a trailing-year net margin of 10.91%, Republic ranks better than almost 73% of waste management rivals. Lastly, analysts peg RSG as a consensus moderate buy with a $167.25 target, implying nearly 13% growth.
Home Depot (HD)
A multinational home improvement retail firm, Home Depot (NYSE:HD) presents another dull case if you’re looking for pizzazz. However, if your primary goal is to acquire steady stocks for uncertain times, it’s hard to look elsewhere than HD. Almost acting as a government institution, Home Depot stores will stay open during inclement conditions (so long as it’s safe to do so).
From everyday concerns to national emergencies, Home Depot epitomizes the phrase stocks for uncertain times. Financially, it’s not perfect. However, what it does right, it does exceptionally well. For example, the company’s three-year revenue growth rate clocks in at 15.2%, above 76.34% of sector rivals. Also, Home Depot is consistently profitable, churning out a net margin of 10.5%.
To be fair, with HD priced at 18.57x trailing earnings, it’s not particularly cheap. However, it’s been rocking a higher multiple earlier this year. With shares down about 6% year-to-date, HD is somewhat de-risked. Analysts rate shares a moderate buy with a $350.04 target, implying almost 18% upside.
A contentious idea for stocks for uncertain times given the underlying volatility, midstream energy operator Enbridge (NYSE:ENB) suffered a loss of 15% since the January opener. Still, for those paying attention to broader trends, ENB could represent a high-risk deal. Sure, that goes against the labels of “steady” and “safe” but hear me out for a second.
While Enbridge suffered red ink, let’s look at the harsh reality: the world still needs and depends on hydrocarbons. Spare me the green energy directives. That may well be the future but that future won’t materialize tomorrow. Rather, until wider economic and infrastructural equity is realized, we’re going to be pumping gasoline into our cars for a long time.
Yes, the valuation for ENB is a concern. Nevertheless, if we’re talking about steady stocks, we’ve got to mention Enbridge’s robust FCF. In 2022, it printed $4.72 billion in FCF and it’s on track to hit over $6 billion this year. Moreover, analysts rate ENB a moderate buy with a $40.47 target, implying 22% growth.
A soft drink stalwart and a symbol of American capitalism, Coca-Cola (NYSE:KO) stands to benefit from the trade-down effect. Basically, consumers facing financial pressures might not quit their expenditures cold turkey. Instead, they’ll trade down to cheaper alternatives until an acceptable equilibrium is found between quality and price. Therefore, Coca-Cola products could replace trips to expensive coffee shops.
However, KO ranks among the riskier side of safe stocks for uncertain times. Since the beginning of this year, shares slipped more than 15%. In the past 365 days, it’s underwater to the tune of 4%, which is worrisome for the blue-chip. Nevertheless, one can also make the argument that KO has now been de-risked significantly.
At the moment, shares trade at a forward earnings multiple of 19.18x. That’s not a bargain, mind you. However, at the end of last year, KO had a print of 25.45x. So, on a relative basis, Coca-Cola is more attractive. Analysts also peg KO as a strong buy with a $66.23 target, implying 24% upside potential.
Perhaps the most recognizable fast-food restaurant in the world, McDonald’s (NYSE:MCD) symbolizes another icon of American capitalism. Talk to people outside the U.S. and the Golden Arches will eventually make its way into the conversation. As a provider of cheap protein (I didn’t say anything about healthy), McDonald’s could – like Coca-Cola – benefit from the trade-down effect.
Again, I don’t anticipate (even with economic troubles) consumers completely giving up eating out at restaurants. Where I do see risk is in the premium establishments. Also, McDonald’s stands to benefit from its extensive breakfast menu should more people be recalled back to the office.
Financially, MCD offers arguably a no-brainer for those wishing to speculate a bit with their safe stocks for uncertain times. With solid revenue growth and consistent profitability, McDonald’s is reliable. Also, it’s gotten cheaper from a historical valuation perspective. Analysts rate MCD a strong buy with a $328.60 price target, projecting over 31% growth.
In my opinion, big-box retailer Target (NYSE:TGT) represents the riskiest idea on this list of stocks for uncertain times. What’s more, in May of this year, I stated in an article for TipRanks that I was bearish on TGT due to the underlying shoplifting crisis that has negatively impacted profitability.
Now, in defense of that assessment, Target’s management team was forced to reduce its profitability guidance. Also, from the time of publication to the close of the Oct. 16 session, TGT shares dropped more than 24% in equity value. I’d say I was more than justified in sounding the alarm. But could the retailer be on the comeback trail?
It’s possible. In the trailing five sessions, TGT gained 2.5%, noticeably better than the half-a-percent up that the benchmark S&P 500 index posted. Also, the business provides its guests with a one-stop-shop experience. From groceries to clothing to electronics and practically everything in between, Target does it all. And given its forward multiple of 12.36x, it’s been significantly de-risked. Finally, analysts peg TGT as a moderate buy with a $146.75 target, implying nearly 32% upside.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.