Stocks for the Great Recession

Includes: CPB, KHC, KR, MCD, WMT
by: John Henderson

Once in a while it is good to take a look around and reflect on things. The fast paced world of finance and economics can have one living in a bit of a bubble, so reflecting on how others are doing can be enlightening.

I heard the clanging in front of me and knew what it was – the gentleman who comes around collecting soda cans. He was on a bike. Since I moved to this part of New York state, I have heard this person in the early morning hours. However, as the Great Recession rolled on over the past year, he changed his routine. All of a sudden he had competition, there were others coming around my neighborhood to collect soda cans. So this gentleman on his bike had to collect his cans on the night before the sanitation came to collect the cans. As I saw this gentleman up close I thought to myself, “what happened to this guy, and these others who collect cans?” Looking at this person up close put a face on The Great Recession.

He is not the only one I have seen has been affected by this cyclone like down turn. My area of New York State has been ravaged by the down turn. Restaurants and small retail establishments continue to close on a weekly basis and store fronts sit empty. Office space is abundant and I continue to see new ‘for lease’ signs in office windows in my town. At the supermarket I see more people use coupons (which I at times do too). My town has a heavy reliance on banking and finance, and it makes me wonder what will finance look like in the future? Nationally, the downturn has made underemployment spike to 17%. That’s an astounding percentage – almost 1 in 5 Americans are underemployed. Underemployment consists of those that are unemployed (= about 10%) and those that work part time but wish to work full time (= another 7%).

Although disheartening to see these trends, it is important to think about those around us as we go about our lives. Plus as investors there may be ways to profit from these trends. Below are 5 stocks that investors may continue to gravitate towards as the Great Recession rolls on. Heinz (HNZ) the ketchup and food company has been a stalwart for years. McDonald's (NYSE:MCD) should see those who want to go out to eat but stick to a budget. Kroger (NYSE:KR) , the supermarket chain should see continued foot traffic as people prepare their meals at home. Wal-Mart (NYSE:WMT) the discounter has some low prices for consumer products and should continue to benefit from the recession. Campbell’s Soup (NYSE:CPB) similarly should benefit as people look for low cost meals to eat at home. These stocks all pay dividends too. Please note that I did not go deeply into the fundamentals and expect the reader to do her/ his own research before taking a position. Hopefully the recession will end soon and underemployment falls to a more reasonable level. Until that time these 5 stocks are worth examining.

Symbol Name Price Market Cap Yield Business
($ Billion) %
HNZ Heinz 42.86 13.5 3.8 Food Products
MCD McDonald's 64.06 69 3.4 Food Service
KR Kroger 21.16 13.75 1.8 Grocery store
WMT Wal-Mart 52.97 202 2 Discount retail
CPB Campbell 32.44 11.12 3.3 Food Products

Authored by Tom Henderson, Strategist JBH Capital

Disclosure: I have no positions but family and friends may own the shares (small amounts).