A staggering 91% of U.S. CEOs are expecting a recession within the next year. That's according to a survey that accounting firm KPMG conducted between July and August. If the country's leaders are bracing for a recession, investors should likely be following suit.
In a recession, all businesses generally struggle as it means people are spending less on products and services. But there are still some safer businesses that can make for good investments and outperform the markets. Two stocks that risk-averse investors should consider today are AstraZeneca (NASDAQ: AZN) and Coca-Cola (NYSE: KO).
AstraZeneca is a top healthcare company with solid financials, a bright future, and a terrific dividend. The company's focus on rare diseases and cancer is why it can continue to do well even in a downturn since its drugs are essential for millions of people around the world.
Through the first half of 2022, the company has generated significant growth. Sales rose 43% year over year to $22.2 billion as AstraZeneca benefited from growth in multiple segments as well as the acquisition of rare disease company Alexion Pharmaceuticals, which it completed last year. Its earnings per share of $0.48 were down 70%, but that was largely a result of increased costs due to the acquisition of Alexion. Over the trailing 12 months, the company has generated $5.3 billion in free cash flow.
There's even more growth on the horizon for AstraZeneca. The company has a promising breast cancer drug in Enhertu, which could generate more than $6.6 billion in annual revenue at its peak. In total, the company's pipeline includes 184 projects that could pave the way for greater revenue growth in the future.
Not only does AstraZeneca make for a good growth stock, but it can also be a great option for income investors. At 2.4%, its dividend yield is higher than the S&P 500 average of 1.8%. Whether you want to invest in the business for its long-term growth prospects or just collect a safe dividend from a low-volatility stock, AstraZeneca is an attractive investment option. It currently trades at 16 times future earnings, which is in line with the average healthcare stock.
Coca-Cola is a safe stock that investors can buy and forget. The business is known for its popular soft drinks, but over the years it has expanded its portfolio to include 200 brands. Its low-priced products can be affordable indulgences during a downturn in the economy. That's how Coca-Cola can prove to be a stable investment.
Its resiliency was evident when the company reported its most recent quarterly results. For the period ended Sept. 30, revenue rose 10% year over year to $11.1 billion. Price increases helped boost the top line and offset a decline in demand as people continued to show they weren't willing to ditch their favorite beverages even amid rising inflation. Its operating income during the period also rose by 7% although it would have been higher if not for a negative effect (10 percentage points) from foreign currencies.
Coca-Cola's results proved to be strong, and the company also raised its outlook for the year, now projecting organic revenue to grow between 14% and 15%. That's up from the previous quarter, when it was expecting growth of between 12% and 13%.
Coca-Cola is a favorite of billionaire investor Warren Buffett, and it's easy to see why. It benefits from a strong brand, and that is certainly helping the business produce strong results today. The stock also pays investors a dividend of 3%. Although the stock's valuation is a touch high -- trading at 23 times future profits vs. 17 for the S&P 500 -- with the safety and continued growth that Coca-Cola offers investors, it's arguably worth a premium in today's volatile market.
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