◊ Best Stocks To Buy During Stock Market Correction ◊
Here are 3 of the best stocks to buy to ride out a stock market correction. Most of these revolve around the idea of investing in high-quality companies that have good cash flows and business health.
1 – Coca-Cola
MARKET VALUE: $222.5 billion
DIVIDEND YIELD: 3.0%
Market pundits often suggest consumer staples stocks when the market seems ready to pull back. Companies in this group enjoy stable demand in good times and bad and their stocks tend to pay good dividends, making them among the best stocks to help soften the blow of a market downturn. However, just because a company is in this sector does not mean it can stave off the bears. It must offer solid financial health and good market share in its industry.
David Bickerton, president of MDH Investment Management in Ohio, says Coca-Cola (KO, $52.03) is well-positioned within the sector, has a “fortress” balance sheet and pays a strong dividend. That payout has increased without interruption for 57 consecutive years…
Coca-Cola cruised to new all-time highs in July thanks in part to organic growth through its Dasani brand of seltzer waters. Its acquisition of British international coffee chain Costa Coffee – which had nearly 3,900 locations by the end of 2018 – is proving to be a major contributor to growth through its stores and thousands of vending facilities.
Coca-Cola’s revenues still are growing outside of the United States, too, despite the generally slower global economy – again thanks in part to Dasani.
A strong U.S. dollar is a headwind for Coca-Cola, as it weakens the effect of the company’s overseas earnings. But should the dollar weaken, that would provide another lift to Coke’s business.
2 – Sherwin-Williams
MARKET VALUE: $47.3 billion
DIVIDEND YIELD: 0.8%
One of the least expensive home improvement projects is a fresh coat of paint. And with demand for home improvement proving to be less cyclical than in the past, Izet Elmazi – senior portfolio manager with Bristol Gate Capital Partners in Toronto – thinks Sherwin-Williams (SHW, $512.95) is the right stock for stability and growth.
Sherwin-Williams is a global leader in making and selling paints, coatings and other similar products. Elmazi believes the company is financially sound thanks to high free cash flow generation and an improving balance sheet. SHW has generated $17.7 billion in revenue over the past 12 months with 43% gross margins.
MARKET VALUE: $111.6 billion
DIVIDEND YIELD: 3.9%
Royal Bank is a global enterprise, operating in 42 countries including Canada and the United States. The company posted more than C$3.2 billion in profits last quarter and is one of Canada’s most valuable brands. It also has raised dividends for eight consecutive years, at a clip of about 8% annually over the past five years.
Royal Bank, like many other Canadian banks, began its current dividend growth streak near the end of the financial crisis – just when markets were starting to recover. But the important takeaway is that Canadian banks’ dividends were starting from higher ground. None of the Canadian “Big Five” banks executed a dividend reduction, and in fact, none had to take a bailout.
As Royal Bank’s stock fell from roughly $49 to under $25 during the heat of the crisis, the stock recovered back to its original $49 price point in less than a year. Compare this to Bank of America (BAC), which currently trades at $29 per share but topped out above $54 in 2007.
… “Canada’s extensive regulatory environment is what saved these banks from insolvency, and is one of the primary reasons they are such a valuable asset to any investors portfolio today” …