No stock investment is absolutely riskless. But buying some stocks is certainly much lower-risk than others for long-term investors. A handful of these companies may even merit a “surefire” status, vulnerable only to the most unthinkable of economic circumstances.
Here's a closer look at three of these “surefire” investments that would be at home in almost anyone's portfolio.
1. Hormel Foods
It scores no points for style or excitement. What Hormel Foods (NYSE: HRL) lacks in pizzazz, however, it makes up for in perpetual marketability.
Think about it. Consumers may opt for a stay-cation rather than a vacation if money gets tight. They might cancel cable TV, or postpone the purchase of a new car. People are always going to want to eat, though, and they'll pay nearly any price to do so.
That's not to suggest Hormel is completely immune to an ever-changing environment. While it's remained profitable in every quarter for several decades now (and those profits have generally grown), not every quarter has always been more profitable than the comparable quarter from a year earlier.
Along with most of its peers, Hormel was bumping into a cost and pricing headwind in 2019, before the COVID-19 pandemic rattled the world. The fallout from the coronavirus contagion and subsequent inflation surge is actually proving fiscally beneficial to the company — at least so far. As was suggested, like most other food companies, Hormel can pass along many of its costs to its customers.
That's not even the key point, though. The bigger point is that, by leveraging its established and well-loved brands like Dinty Moore, Planters, Skippy, and of course, Hormel (along with several others), this food company has proven it's here to stay.
2. American Express
On the surface, it seems like a stretch to call a credit card company like American Express (NYSE: AXP) a surefire investment. Wouldn't a soured economy or the advent of alternatives like “buy now, pay later” lending pose threats to this aspect of consumerism?
Actually, no, it wouldn't.
Reality: The world is addicted to living on credit card debt.
While the average U.S. consumer made small progress toward paying down credit card debt in the early days of the pandemic (when they had little opportunity to spend), most have rekindled their pre-pandemic spending habits. The Federal Reserve Bank of New York reports that total credit card debt within the United States peaked at $930 billion in the final quarter of 2019, bottomed at $770 billion in the first quarter of 2021, and has rebounded to $860 billion as of the end of last year. Tack on all the (higher-priced) homes purchased just within the past couple of years, and U.S. consumers' total debt is back into record-breaking territory.
One would think this situation poses problems for middlemen like American Express, which ultimately become lenders. This time is different than the trouble the lending industry ran into in 2007, though. This time, consumers are far more creditworthy, and their credit scores continue to improve while loan delinquencies continue to fall.
That's the ideal backdrop for credit card companies, presuming an entire generation of spenders doesn't want to slip into the same sort of trouble that too many people found themselves in following the sub-prime mortgage meltdown.
Oh, and if you want to know why AmEx topped Visa and Mastercard to earn a spot on the surefire stock list, it's because the company is second to none when it comes to building an ecosystem of cardholder perks. That's why this year's projected top-line growth of 18.5% and next year's 12.1% isn't terribly unusual.
Finally, it's a predictable pick, but add Apple (NASDAQ: AAPL) to your list of investments that you'll be glad years from now you bought today.
Apple is, of course, the name behind the world's single most popular smartphone, the iPhone. Global Stats' statcounter indicates Apple's flagship device re-captured the biggest share of the mobile total market from Samsung in the latter part of last year, despite, according to CounterPoint Research, the iPhone's (much) higher average selling price of $825 apiece.
It's a testament to just how willing Apple's loyal fans are to open their wallets and pocketbooks. There may come a time when smartphone saturation and competition finally catch up with Apple's iPhone, but that time isn't now, nor in the foreseeable future.
The thing is, even when the iPhone finally runs its course, Apple is ready. It's building an apps and digital entertainment ecosystem of its own, which may not yet be a heavy hitter within the industry, but is becoming a significant piece of the company's business. Digital services accounted for nearly 19% of last fiscal year's top line, but made up more than 31% of the company's profits. Even just a little more growth for its services business could lead to oversized upside for its bottom line. Better still, unlike much of its hardware business, that high-margin services revenue is sustainable and repeatable. A great deal of it is outright subscription-based.
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American Express is an advertising partner of The Ascent, a Motley Fool company. James Brumley has no position in any of the stocks mentioned. The Motley Fool owns and recommends Apple, Mastercard, and Visa. The Motley Fool recommends the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool has a disclosure policy.