3 Stocks That Will Earn You High Returns In The Coming Depression
By Editor, Bear Market
Politicians, economists, and leaders of all kinds worldwide are saying we’re already in a recession.
One likely to be worse than The Great Recession.
This is true in economic terms already as you likely already know all too well…
As of this writing there are already more than 33 million Americans unemployed.
The “official” unemployment rate in the US is 14.7%.
And the “unofficial” rate is estimated to be near 23%.
These are the worst unemployment rates in the United States since the Great Depression.
And at an estimated 23% rate we’re already near the US all time high unemployment rate of 24.9%.
This unofficial rate shows a truer picture because it includes people who have stopped working, people who are getting paid and not working, and other things the “official” number doesn’t show.
These coronavirus lockdowns US wide have crippled the economy…
Technically by the definition of a recession we won’t “officially” be in one until July 30th, 2020 when the US government reports 2nd quarter GDP numbers.
GDP must contract in 2 straight quarters at minimum for us to technically be in a recession.
But we’re already here.
You and I both know it even if the government won’t say so officially until the end of July.
And at least in the short-term things are going to get worse.
A lot worse.
In the 1st quarter US GDP contracted by 4.8%. The highest quarterly fall since 2008 during the Great Recession.
And 2nd quarter GDP estimates are expected to show a US contraction of 15% to 40%.
If the US GDP is anywhere in this range, it would be the largest GDP contraction in US history.
Worse than the 12.9% US all time high we saw during the worst of the Great Depression.
We’re not heading toward a recession.
We’re headed toward a depression type of economy.
And few in the mainstream media and financial news are talking about this.
To prepare for the coming Depression I want to show you 3 stocks that will help you earn higher returns in the coming years.
No matter whether we’re in a prolonged depression.
Or whether we recover and go back to normal life tomorrow.
These 3 stocks will make you money no matter which of these situations we end up closer to.
Disclaimer – The stocks below we believe in enough to tell you about but the 3 stocks below ARE NOT official recommendations. Due to potential legal issues we can’t officially recommend them to you. But these should be a good place to begin your search.
No matter what kind of financial situation the next few months or years find us in people still need to eat.
They may stop paying their home mortgages, car payments, student loans, etc. But people will find a way to feed their family.
Because of this Kellogg should be one of the major companies to benefit in the coming years.
Why? Because they’re the one of the largest food producers in the world.
A top 100 recognized/powerful brand in the world.
It owns some of the most famous brands in the world including Pop-Tarts, Eggo, Frosted Flakes, Fruit Loops, and many more of the brands you grew up with.
And I bet if you go look at some of the food in your pantry right now much of it made by Kellogg.
Plus, on top of this they’ve been around since 1906 which means they are stable.
Two other things that make them stable is they the company produce regular profits and cash flows.
Its operating profit margin averaged 12.5% every year over the last 10 years. I look for any company to produce above 10% margins on a consistent basis to consider as an investment.
And their FCF/Sales margin averaged 7.4% per year… I look for anything above 5% on a consistent basis to consider an investment.
The company meets my threshold on both important metrics… These are important because they show Kellogg produces profits and cash to continue funding operations and growth.
Plus, they will pay you a 3.6% dividend just to own their shares.
Kellogg will be around for decades to come – no matter what the economic situation becomes.
Because of this, you should look at them if you’re looking for Depression resistant stocks.
Here’s another company that will benefit you no matter what the world’s economy is doing.
Another thing people won’t stop during a depression is smoking.
a) Because they can’t due to the addictive nature of tobacco of course.
b) Because most smokers also like smoking.
Because of these things, cigarette companies will also benefit no matter the economic situation.
And Altria is the biggest and best.
Altria is the owner of some of the most powerful tobacco brands in the world: Marlboro, Copenhagen, Skoal, and Black & Mild as just a few examples.
Marlboro is the 23rd largest/most recognized individual brand in the world. And this brand alone owns 43% of cigarette market share.
How large is that?
The Marlboro brand is larger than the next 8 largest cigarette brands combined.
Over the last 10 years it averaged an operating profit margin of an enormous 44.6% per year. I look for any company to produce above 10% margins on a consistent basis to consider as an investment.
And its FCF/Sales margin averaged 26% per year… I look for anything above 5% on a consistent basis to consider an investment.
Altria crushes my threshold on both important metrics… These are important because they show Altria produces profits and cash to continue funding operations and growth.
And as of today, it pays you a 9.23% dividend today just to own its shares.
Look at Altria if you’re looking for an ultra-safe investment to survive and thrive during a depression type scenario.
Even with mass unemployment people will continue to buy necessities… Even if they skimp on higher end purchases.
Many of them will go to Wal-Mart… The largest retailer in the world as of January 2020 with $517 billion in worldwide revenue.
And it’s also the 26th most valuable/recognizable brand in the world.
Wal-Mart is known for its “everyday low prices” and with more people looking to save money in the coming months and years Wal-Mart is likely to see an increase in people buying essentials like food from their stores.
Because of its low prices, Wal-Mart generally earns lower margins when it comes to operating profit and free cash flow than the two above.
But that doesn’t mean it’s making less money.
Another way to look at profitability is to use return on invested capital or ROIC.
Wal-Mart’s ROIC’s averaged 12.3% per year over the last decade.
I look for anything above 10% on a consistent basis to consider and investment so Wal-Mart surpasses this threshold of min.
ROIC is important because it shows you not only how profitable a company is but also how efficient it is as well.
Plus, it also pays you a 1.75% dividend as a shareholder.
Yes, in the past Wal-Mart was known for bad service and nonexistent online options.
But in the past few years it worked hard to improve both things. And they have improved both.
Even going so far as to taking on directly online retail giant Amazon in grocery deliveries.
Wal-Mart will be around for years to come no matter the economic situation… And you may benefit from owning it.
As mentioned above, I think the government officials are lying to us.
We’re already in a recession and likely headed toward a depression type of economy with the coronavirus pandemic and subsequent lockdowns.
In times like this I want to invest in companies that are safe, stable, have huge competitive advantages, safe balance sheets, and ones that produce a ton of profits and cash to protect my investments.
The 3 stocks above should be great picks in this kind of market because people will continue buying their products and services no matter what.
But even if we’re wrong here and we get back to normal fast – the 3 stocks above will continue to help you and your portfolio in either of these situations.