The market’s outlook grew significantly dimmer yesterday. The Fed made clear that investors should not expect a rate cut in a July, which took the wind out of equity investors’ sails. With that in mind, here is a list of ten stocks that should help investors win in a downturn. The theme here is “low volatility” stocks, or stocks with less risk that should outperform the market in a choppy environment. The list: Aflac, Amdocs, American States Water, Atmos Energy, DTE Energy, Duke Energy, McDonalds, NextEra Energy, OGE Energy, WEC Energy Group.
FINSUM: Given the Fed’s reversal from what the market thought was its stance yesterday, right now does seem like a good time for low volatility stocks.
Restaurants are an area that don’t get much attention in the media, but can be a place where investors can find alpha. With that in mind, we wanted to run some analyst picks that choose the best food stocks. The three names are Dunkin Brands, McDonalds, and Yum! Brands. The case for Dunkin is that though the company has underperformed a little lately, they are poised for a rebound, especially with the new branding of just “Dunkin”.
FINSUM: McDonalds is the most interesting pick for us, as we admire the changes and leadership of the CEO and think updating the menu and the physical restaurants has and will continue to be successful.
McDonalds has been slowly reinventing itself over the last few years. Big menu changes and and healthier items have been a major part of that shift. Now the restaurant chain is doubling down on one its recent focus areas—breakfast. A few years ago McDonalds decided to make a handful of breakfast items available all day. The change was a hit with customers and investors and helped grow sales for the year. However, recently, McDonalds has blamed it for slowing sales as its morning business has actually weakened because consumers can get breakfast items all day. Now it is changing its tact by offering breakfast sandwiches starting at just a Dollar and offering extra-meat breakfast sandwiches all day.
FINSUM: It seems all day breakfast has cannibalized some sales for old Mickey D’s. The dollar menu approach in the morning should help.
McDonalds is taking one of its boldest menu steps in years. The company has announced that it will eliminate all artificial ingredients from its burgers. Ingredients such as calcium propionate and sodium benzoate will disappear from the Quarter Pounder and Big Mac as McDonalds tries to project a more healthy image. The move follows efforts earlier this year to use fresh beef and natural beta carotene in its burgers. Since the changes, many menu items have seen sales increases.
FINSUM: The healthy food movement has reached a significant mass and we think these changes were ultimately a must for the company.
Safe dividend stocks are absolutely prized by America’s retirees. No group relies on dividends more than retirees, and most seek safe and reliable dividends with underlying businesses that can provide some price appreciation too. With that in mind, three stocks to look at are McDonalds, Corning, and Starbucks. All three companies have strong and growing businesses and seem committed to rewarding shareholders. They also have the formidable capital position to be able to invest in continuing robust growth even in changing times.
FINSUM: We don’t know much about Corning, but McDonalds seems like a good bet to us. The company has responded well to the shifts in consumer tastes and it has been innovative in adapting its menu and model to the new environment.