7 safe stocks to buy in July 2022
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- Investors will turn overwhelmingly to safe stocks in July as woes mount.
- Campbell’s Soup (pcb): Strong performance and value make Campbell Soup a great hedge.
- Brown Forman (BF-B): Catalysts conspire to make liquor makers a winner.
- Johnson & Johnson (JNJ): Stable fundamentals and steady growth underpin JNJ’s security.
- General dollar (CEO): It is one of the few retailers to offer advice in this environment.
- Goldman Sachs (GS): A leaning toward the wealthy during tough times favors this bank.
- Ultimate beauty (ULTA): The strength of supply and demand underpins the ULTA stock.
- Louis Vuitton (LVMUY): Luxury goods may seem like an unlikely choice now, but they’re not.
There’s no doubt that investors are quickly turning to anything safe these days. We can characterize this fear in many ways, but generally speaking a strong barometer is the fear and greed index. Its current reading is “extreme fear”, the lowest reading there is. And that should be directly correlated to the market adopting a more defensive stance. This means that certain stocks are likely to see increased investment as portfolios change in a period of risk.
And in July, this trend will only get stronger as we enter new territory and inflation rises as consumption peaks with the July 4 holiday. This potential spike is just one of many factors affecting the economic outlook. In short, the attractiveness of safe bets will only increase in July.
Let’s take a look at these seven safe stocks to buy in July:
|pcb||Campbell Soup Company||$48.31|
|BF-B||Brown Forman Corporation||$70.37|
|JNJ||Johnson & Johnson||$176.33|
|CEO||Dollar General Corporation||$243.48|
|GS||Goldman Sachs, Inc.||$292.97|
|ULTA||Ulta Beauty, Inc.||$378.67|
Safe Stocks to Buy: Campbell’s Soup (CPB)
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It’s pretty easy to see why a brand like Campbell’s Soup (NYSE:pcb) makes sense as a stock to buy in these times. Its brands, especially soups, are synonymous with value. And the company is proving that it can operate well in an inflationary environment marked by significant supply constraints.
Management is keen to emphasize that it is finding ways to ease the pressure on margins, which is reflected in net sales which increased by 7% and continued operating earnings per share (EPS) which increased by 15%.
2022 has already proven to be a very difficult market. Chances are things will get worse before they get better. However, CPB stock resisted the downward trend. In fact, it’s up a few percent on the year. Don’t expect it to increase significantly. Rather expect it to continue to act as a hedge against the massive inflation we are experiencing and appreciate it for the accompanying 3.15% dividend.
Source: Cabeca de Marmore/ShutterStock.com
Producer of alcoholic beverages Brown Forman (NYSE:BF-B) has not been spared from the 2022 recession. In fact, year-to-date, it has fallen from $71 to $67 at the time of writing. That’s not particularly bad, especially when compared to broader markets that have fallen over 20%. And there are good reasons to believe that several factors will work in its favor in July.
For one thing, people like to drink alcohol on July 4th. Whether it’s one of its whiskey brands, including Jack Daniels, Woodford Reserve or Finlandia vodka, you can safely assume that sales will increase.
Second, consider that the US economy has deteriorated following the Federal Reserve’s recent rate hike. There’s another rate hike slated for July, which Chairman Jerome Powell is telegraphing to be just as severe. This means that the closer we get to a recession, the more highly favored the consumption of spirits becomes.
Safe stocks to buy: Johnson & Johnson (JNJ)
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Johnson & Johnson (NYSE:JNJ) stock exudes security not only for the brands it produces. It is a permanent choice for any investor looking to mitigate risk within their portfolio. It does not offer investors great potential for outsized gains, but rather slow and steady gains.
This is evidenced by the modest EPS beats he’s had in each of the past four quarters. They’re not huge, but they’ve been consistent.
Take a look at Johnson & Johnson’s price chart over the past three years to see why it’s still rated safe. It only fell with the onset of the Covid-19 pandemic, which proved absolutely inevitable for all stocks. However, it quickly returned to its regular trajectory and has not budged since, even as the economy falters.
A cursory look at the company’s projected fundamentals through next year indicates more steady revenue and earnings growth, which is exactly what will define safety in this market.
General Dollar (DG)
Source: Jonathan Weiss/Shutterstock.com
The same point I made above for Johnson & Johnson is true for General dollar (NYSE:CEO) Inventory. It has provided consistent, modest EPS beats over the past four quarters.
This is good news in itself. Additionally, at the same time the results were released, Dollar’s senior management announced it was raising the full year guidance at a time when other retailers were being crushed. This confidence sends a strong message to investors, as DG stock remains stable for the year. At other times, lying flat is often used to indicate weakness. In this case, it is not.
Equally important, investors should simply note that Wall Street expected Dollar senior management to cut its forecast. So when management told Wall Street that it intended to not only achieve 9.3% sales growth this year, but 10% to 10.5%, investors should have perk up.
Dollar General is not going back. This speaks to its pricing strategy. It is logical to expect the 4th of July to give sales a boost. Also, expect inflation to continue to rage, sales will also increase.
Safe stocks to buy: Goldman Sachs (GS)
Source: Novikov Aleksey/Shutterstock
Recommend Goldman Sachs (NYSE:GS) is a clear departure from the defensive consumer goods stocks already listed in this article.
The reason, however, is simple. UBS Group (NYSE:UBS) recently highlighted the clear opportunity in high-end consumer-exposed stocks. The fact is that the wealthy are less likely to suffer if and when a recession starts.
On the one hand, Goldman Sachs caters to a high-end clientele that more commercial banks, such as Bank of America (NYSE:BAC). The point here is that Goldman Sachs should see an increase in business volume as its wealthier clients diversify their assets to take advantage of any recession.
And rising interest rates favor the bank because it can reasonably expect an increase in fees as well as revenue as a result.
Ulta Beauty (ULTA)
Source: Jonathan Weiss/Shutterstock.com
Ultimate Beauty (NYSE:ULTA) The stock isn’t one that gets a lot of attention, but it should. The products this beauty retailer sells seem to be holding up well in the recession. Additionally, its operations are clearly strong with a supply chain strategy that suggests it can continue to thrive.
The company’s most recent quarterly results are impressive. The company posted record sales of $2.3 billion. Equally important, its gross profit is rising at a time when many other retailers are seeing their margins shrink.
These impressive results boosted management confidence enough to raise the fiscal 2022 sales forecast from $9.05-9.15 billion to $9.35-9.55 billion.
Additionally, the company noted that merchandise inventories fell from $1.35 billion to $1.57 billion year-over-year at the end of the quarter. This suggests that the firm should not have problems with supply-side constraints. Given that demand seems strong, Ulta Beauty appears to be in a strong position overall.
Safe stocks to buy: Louis Vuitton (LVMUY)
Source: Vietnam Archive Photos / Shutterstock
Invest in Louis Vuitton (OTCMKTS:LVMUY) stock makes sense given the expanding global middle class. I have already mentioned that the elite will not be affected by a recession in the same way as the rest of us. If you believe in the idea that the elite will benefit while the rest will suffer, LVMUY should pique your interest.
But it’s not just the 1% who buy Louis Vuitton products, it’s also the growing global middle class. They want to be seen in Christian Dior Where Fendi while carrying Porthole and Bulgari watches and drink Chandonas well.
The point here is that July may well kick off a new round of recession fears. Rather than making luxury stocks less attractive, it makes them more attractive, according to UBS. Louis Vuitton is a solid company and it doesn’t seem to be worried about the broader issues surrounding the recently announced share buybacks.
At the date of publication, Alex Sirois did not hold (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.
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