5 Stocks to Buy for an Uncertain 2020
These five stocks offer a balance of offense and defense to help you finesse your way through a tricky outlook.
With the market finding its way through tricky economic territory, investors will have to strike a careful balance between offensive and defensive moves. These five stocks will help you finesse your approach, with a blend of classic safety plays, companies that will shine as the economy recovers and those that poised to profit in a post-pandemic world.
Stock prices and other data are through May 15.
American Electric Power
- American Electric Power (AEP, $78). Operating in 11 states, this electric utility mixes defense of a 3.6% yield with some sensitivity to an economic rebound, says T. Rowe Price portfolio manager David Giroux. Look for long-term annual earnings growth in the mid-single-digit percentages.
- Becton Dickinson (BDX, $258). The health care equipment maker has a pipeline of products to battle COVID, says BofA Securities, including a test that will confirm an active infection in 15 minutes. Becton is ramping up to produce syringes for a COVID vaccine.
- Costco Wholesale (COST, $299). Competitive advantages go beyond pandemic-related stockpiling, says Morningstar. Membership renewal rates are nearly 90% and have held steady through the financial crisis and the rise of e-commerce.
- Peloton Interactive (PTON, $48). Peloton has yet to post a profit. But it has first-mover advantage in the interactive fitness market, allowing it to achieve critical mass and cultivate a loyal following. Brand awareness grew with free-trial marketing amid the pandemic, says investment research firm CFRA.
- Southwest Airlines (LUV, $24). People will fly again, and this low-cost airline has the financial resources to survive until they do, says Artisan Partners portfolio manager Dan O’Keefe. The domestically focused carrier is in the best position to take market share from struggling competitors.