The 11-year old bull market is on life support.
With the bear about to rear its ugly head, investors are going to need to mitigate the risks if they haven’t done so already, which means steering clear of travel and airline stocks that stand to take a brunt of the damage and looking to lowly correlated investments that’ll stand to benefit from continued rate cuts.
There’s no telling how bad things will get, but now is as good a time as any to bring balance to your holdings if you’re overweighting in a vulnerable sector. Without further ado, consider the following two names that are easier to buy as the market tanks.
Grocery stocks have been soaring recently as frightened consumers look to stock up on supplies to prepare for a prolonged period of self-isolation.
While Alimentation Couche-Tard (TSX:ATD.B) isn’t a “stay-at-home” play, but as a consumer staple, it’s one of the more resilient businesses out there. The local convenience store is arguably a better place to get supplies if you’re actively seeking to avoid crowds.
Sure, supplies may be more expensive at the local Circle K, but the convenience of getting what you need as quickly as possible and with minimal contact, I believe, is more than worth any premium paid on supplies.
Couche stock is dirt cheap. At the time of writing, the stock trades at 17.9 times next year’s expected earnings and 0.6 times sales.
With a nearly zero beta, Couche is also more likely to zig when the markets zag, so investors would be wise to stock up on Couche if they’re looking to protect their portfolios without paying an arm and a leg.
KP Tissue (TSX:KPT) is a small cap company that doesn’t get the attention it deserves from the mainstream financial media. The toilet paper-maker sports a 6.4% yield and has shown resilience amid the last two weeks of selling hell as the company looks to bounce back from its prior operational rut.
The company provides paper necessities that experience constant demand regardless of the state of the economy. When we’re on the cusp of a pandemic, the need for such paper necessities could skyrocket, as they have in some of the most affected markets across the globe.
Despite being a boring, defensive play, the stock has been notoriously volatile thanks to the fluctuating pulp prices. Over the coming years, management expects pulp prices to be less volatile, and as the company investors in improving operational efficiencies, KPT stock could be one of the few green gems in the TSX’s sea of red.
Couche-Tard and KP Tissue are by no means sexy stocks. While they’re both boring businesses, they have what it takes to outperform in times of panic.
A potential bear market could drag through year’s-end, so you may want to prepare for the worst as you hope for the best and vaccinate your portfolio.
Stay hungry. Stay Foolish.
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This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Joey Frenette owns shares of ALIMENTATION COUCHE-TARD INC. The Motley Fool recommends ALIMENTATION COUCHE-TARD INC.