For Immediate Release
Chicago, IL - May 7, 2012 - Today, Zacks Investment Ideas
feature highlights Features:
Johnson and Johnson
Sturm, Ruger & Co., Inc.
Strategies for "Tough Times"
I don't think there is an expert out there who can deny that the
global economic situation is tenuous at best. Depending on
whom you ask, the average consumers' fiscal health outlook for the
next 12 months may range from bleak to perhaps hopeful. You
would be hard pressed to find an informed economist, investor,
professional or politian that sees an explosion of growth in the
next year without some struggle.
By the numbers, at least here in the U.S., the BLS employment
reports have been showing a decline in the number of jobs added
over the past 3 months. Last year, those same months of the
year actually saw a systematic increase in jobs with May being the
height of jobs growth and then falling off a cliff, eventually
sending the S&P 500 down 300 points or almost 30% by the lows
in August. Friday's abysmal
punctuates this trend of decline and if May was the best
month in 2011, I am scared to see what June 2012 holds.
While manufacturing PMI came in higher than expectations this
week, the average readings this year is still lower than 2004-2007
and 2009-2011. Non-manufacturing PMI looks the same.
The housing market continues to struggle in both price and the
rate of sales. These and other indicators here and abroad commonly
point to a "mixed" outlook and anemic recovery at best.
Even with all this, the major indices are close to 4 year highs.
Is the party over? If so, what should you be doing in your
portfolio to prepare.
Our New Problem
History has shown that in tough times, you can move money into
to consumer staple stocks, bonds, money markets, etc to decrease
your portfolio's volatility and preserve capital.
While those suggestions are still viable, there are several
potential issues. Bonds (U.S. Treasuries) are probably the
worst place to be now. The FED (along with the masses) have
been scooping up these notes since the crisis, driving prices up
and yields down. If things turn out to be "OK" and the FED
takes no further action or even raises rates, bond prices may
tumble and holders of bonds will then have a poor yield on a bond
they overpaid for and may incur principal losses as well.
If inflation continues to tick up, money market rates may do the
same, but being that the national average is less than 0.5%, the
interest rate is far short of the target of 2% inflation. This
means your principal, while safe, may have inflation risk.
If things do get better, consumer staple stocks may not give you
the capital appreciation you desire as investors flock to the
"sexier" growth stocks out there. While consumer staples or
traditional dividend earners are not a bad place to look, but let's
examine three stocks in three sectors that may be alternatives for
the basic staple companies like
Johnson and Johnson
When Americans get nervous about the economy (and stability) of
global economies, we tend to change our spending habits.
Recently those habits have included buying firearms. Smith
& Wesson, Sturm Ruger and others have seen demand growing
almost constantly since 2008, sparked by economic uncertainty and
worries that Barack Obama might seek to reduce gun rights in
Sturm, Ruger & Co., Inc.
) opened for business back in 1949. RGR is
principally engaged in the design, manufacture, and sale of
firearms and precision metal investment castings. They are the only
U.S. firearms manufacturer which offers products in all four
Last month RGR announced that it had received orders for more
than 1 million units in the first quarter alone; the company noted
that "despite efforts to increase production rates, the incoming
order rate exceeds our capacity to rapidly fulfill these orders."
What's more is that RGR still remains relatively valuable at
20 times forward earnings. While this number may seem
relatively elevated, consider the fact that RGR has beat analyst
estimates 7 quarters in a row and has averaged an almost 27%
positive earnings surprise over the past year.
Industry experts see the firearms growth continuing, quality
manufacturers like RGR will most likely continue to
benefit. RGR is a Zacks Rank #1 Strong Buy and
currently yields a 1.55% dividend.
At a recent investor conference, I was reminded that beer has
shape world cultures throughout the ages. Beer is the 3rd
most consumed beverage in the world, next to water and tea.
Its roots can be traced back to 9500 BC…
In tough times, many turn to beer to reduce stress and bring a
modicum of relief to a tough day. Arguably, beer also serves
as a social bond for friends and community members to network and
get through those hurdles. At home and in pubs around
the world, beer brings society together and maybe makes things just
a little bit better.
In good times, people still enjoy a good brew, but perhaps with
different motivation for doing so. Maybe with a couple more
bucks in your pocket, you may even go for that premium,
hand-crafted malted brew you have been curious about. Like it
or not beer is here to stay.
A colleague of mine recently wrote about
), which is a Zacks Rank #1 Strong Buy and has enjoyed some serious
momentum over the past year.
Think outside the box when you are looking for defensive
stocks. Use your logic and experience to target companies
that will benefit in good times, but also not do so poorly in bad
times. The "Stay-cation" is a popular term coined during the
With limited funds, poor job prospects and high petrol prices,
many consumers either went the cinema which helped companies
) or they watched at home, which was beneficial to companies
Hopefully this got you thinking about alternatives for a shaky
economy. Look at your habits, what do you do differently at
home when times get tough?
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COINSTAR INC (CSTR): Free Stock Analysis Report
JOHNSON & JOHNS (JNJ): Free Stock Analysis
REGAL ENTMNT GP (RGC): Free Stock Analysis
STURM RUGER&CO (RGR): Free Stock Analysis
BOSTON BEER INC (SAM): Free Stock Analysis
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