The $3 pot stock that ALMOST everyone is missing
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There’s no denying we’re in the late stages of the current economic cycle. We’re nine years into the bull market, employment is at or near full capacity, inflation is picking up.
At some point, this already slowing economy is going to plunge into a recession and with it, an accompanying bear market for stocks. It’s inevitable.
So while many names have seen phenomenal gains in recent years, it’s time for investors to start positioning for a possible recession, which seems likely to hit within the next year or two, to experience as little bloodshed as possible.
And while most stocks will suffer when the tide turns—I’m looking at you, high-flying tech and luxury stocks—there will be some that will weather the storm and even rise higher while other stocks sink.
Here are three such stocks that should be on your radar.
Costco (NASDAQ: COST)
Costco (NASDAQ: COST) has a lot to offer consumers during difficult economic times.
When times get tough, consumers tend to eat in more—but still want quality goods—and buy in bulk to save costs, factors that work in Costco’s favor.
Retailers in general have struggled in recent years with the rise of Amazon and the transition to online shopping. But Costco’s growth has continued. Same store sales have risen by roughly 10% in the first half of this year.
But while sales growth is important, what really fuels Costco’s bottom line is its memberships. Despite last year’s increase in membership prices, renewal rates remain at around 90%, and with new locations opening and the company’s expansion into China coming in 2019, its memberships will continue to rise for the foreseeable future.
Dollar Tree (NASDAQ: DLTR)
This retailer offers something a little different from COST.
When times get tough, this chain of stores where every item costs $1 or less is likely to resonate with cash-strapped consumers looking to get the most bang for their buck.
Dollar Tree’s (NASDAQ: DLTR) expansion beyond its offerings of party favors into basic household goods like cleaning supplies and groceries was a brilliant move in 2008. CEO Bob Sasser has called it a “key to our relevance in both good times and bad,” and he’s certainly correct – DLTR outperformed the market by nearly 100 percentage points that year.
But even during the better times we’ve seen since then, DLTR has enjoyed average growth of about 16% per year over the last five years, and analysts believe the stock will still deliver roughly 13% per year on average for the next five years.
Amgen (NASADQ: AMGN)
In good times and bad, one thing that everyone will need is healthcare.
Biotech giant Amgen (NASADQ: AMGN) insulated itself from the last recession through vital cancer, anemia, and other drugs that patients couldn’t go without. And in 2008, Amgen’s product revenue grew by 3% which wasn’t too shabby considering most were in panic mode.
That year also saw positive clinical trial results for its denosumab, a drug that would rake in $2.7 billion in revenue by 2015. The company was also smart in the last market crisis when it bought back millions of shares below $56 – substantially less than the current share price.
Thursday, the company crushed Wall Street’s second quarter expectations, reporting double-digit growth for its cholesterol drug, Repatha. Amgen also reported double-digit growth for cancer drug Kyprolis, osteoporosis drug Prolia, and bone health drug Xgeva, resulting in 2% growth in product sales overall. Repatha saw the biggest increase, growing 78.3% to $148 billion.