Its always nice to have a portfolio that is recession proof. It would be probably impossible to create something of this nature, but there are companies out there that no matter what happens in the world, consumers will continue to buy their products.
Here are seven companies I believe would outperform the market in the event of a double-dip:
The Coca-Cola Company (KO) manufactures, distributes, and markets nonalcoholic beverages worldwide. It principally offers sparkling and still beverages.
I have never met a single person who didn't know what Coke is. This Buffett favorite is said to have one of the largest moats in the world. No matter what happens in the economy, soda consumption will still be around. Coke has a forward P/E of 16 and pays a 2.7% dividend.
The Procter & Gamble Company (PG) provides consumer packaged goods in the United States and internationally. The company offers beauty products, such as cosmetics, female antiperspirant and deodorant, female personal cleansing, female shave care, hair care, hair color, hair styling, pharmacy channel, prestige products, salon professional, and skin care products under the Head & Shoulders, Olay, Pantene, and Wella brands; and grooming products, including electronic hair removal devices, home small appliances, male blades and razors, and male personal care products under the Braun, Fusion, Gillette, and Mach3 brands.
Even in a recession, do you stop shaving? Do you stop using shampoo? Do you stop using deodorant? P&G is a company that provides necessities to households. Its products are seen in almost every household across America. American households are not likely to cut its expenditures in products that P&G provides. They would most likely cut back on non-essential items first. P&G has a forward P/E of 13 and pays a 3.4% dividend.
McDonald's Corporation (MCD) together with its subsidiaries, operates as a food service retailer worldwide. It franchises and operates McDonald's restaurants that offer various food items, soft drinks, coffee, desserts, snacks, and other beverages, as well as full or limited breakfast menu.
McDonald's has had a bad name on the impact on health of Americans, who consume its burgers and fries. However, it recently got its act together by providing healthier options and becoming more transparent. I like McDonald's because the company appeals to consumers with a low food budget. Mcdonald's has a forward P/E of 14.8 and pays a 2.9% dividend.
Dollar General Corporation (DG) operates as a discount retailer of general merchandise in the southern, southwestern, midwestern, and eastern United States.
Dollar General has been a hit amongst most fund managers including Warren Buffett. The company is a great option for a convenient store with cheap prices. The company has done very well and has managed to increase its net income throughout the recession, a feat most companies have not had the pleasure of doing. Dollar General has a forward P/E of 13.5.
Wal-Mart Stores, Inc. (WMT) operates retail stores in various formats worldwide. The company's Walmart U.S. segment offers meat, produce, deli, bakery, dairy, frozen foods, alcoholic and nonalcoholic beverages, while having everyday necessities.
Wal-Mart has been staying steady the last few years. The company has had a tough time with same sales growth numbers, but Americans are still continuing to use them. It provides cheap groceries and just about anything else you would need. I like the valuation of Wal-Mart. Wal-Mart has a forward P/E of 10.5 and pays a 2.8% dividend.
PepsiCo, Inc. (PEP) engages in the manufacture, marketing, and sale of foods, snacks, and carbonated and non-carbonated beverages worldwide.
Although many believe that Pepsi and Coke are direct competitors, I would have to disagree. The nice thing about Pepsi is that you have a snack food play. It has major brands such as Doritos and Lays. Not to mention it has brands like Quaker and Cap N Crunch. Pepsi has a forward P/E of 12.3 and pays a 3.4% dividend.
Johnson & Johnson (JNJ) engages in the research and development, manufacture, and sale of various products in the health care field worldwide. The company operates in three segments: Consumer, pharmaceutical, and medical devices and diagnostics.
When you get a cut, you use a band-aid. When you have ache or pain, you take a Tylenol. When you have vision problems, you use Acuvue contacts. JNJ has a product in every medicine cabinet of every household. The company is a powerhouse pharmaceutical company with some of the strongest brands in the world. Recently, the company has had a PR problem with its packaging of medicines, but I believe this will eventually pass. JNJ has a forward P/E of 11.8 and pays a 3.6% dividend.
I honestly believe these companies would be least prone to a double-dip in the global economy. They are great candidates to have in your portfolio.