The stock market is surging this year and as the S&P 500 trades at record levels, it is time for investors to start protecting themselves from the inevitable downturn. But, at the same time, the high levels of security provided by Treasury bonds does little to promote growth for an investment portfolio.
To remedy this conundrum, mid-cap stocks in key sectors can provide growth opportunities while providing protection during the next economic recession. For these reasons, these four stocks selected below are well-positioned to capitalize on all of these bullish market trends.
Some have said that the healthcare sector is the “most secular” of sectors, and this puts cancer drug developer Exelixis, Inc. (NASDAQ:EXEL) in a strong position to succeed when the rest of the market is failing. The company’s main main drug offering is Cabometyx, which was one of the first to provide effect treatment for advanced renal cell carcinoma.
The company has made significant progress in its objective response rate improvements, and its survival rates for patients with kidney cancer. Current analyst expectations suggest that Exelixis could produce earnings per share of $1.72 before 2021, which gives the stock a forward P/E ratio of only 16. This ultimately means the stock is still cheap even though it is starting to get attention from the biotech investment market.
In a market downturn, technology stocks could get hit hard. But there are some tech stocks which will still be necessary for basic business operations and a key selection here is MongoDB, Inc. (NASDAQ:MDB). MongoDB has solves many of the problems associated with the decades-old technology used by most providers. While other companies rely on databases supported by structured data, MongoDB has found a way to meet the market’s tech needs of today.
MongoDB has shown success in cloud computing and its revenue figures have surged by nearly 60% based on its compounded annual growth rate (CAGR). This puts the company in an excellent position to continue absorbing market share even during times of broader economic weakness.
During an economic downturn, consumers generally have less money to spend and most of those consumers are going to be looking for better deals in the market. This means luxury items suffer, while value-oriented providers flourish. One name that stands to gain is Tanger Factory Outlet Centers, Inc. (NYSE:SKT).
The stock has fallen out of favor in recent years, which is not entirely surprising since the economy has shown tremendous strength. But once this cycle starts to turn, SKT is likely to regain some of its prior footing. Tanger develops high-quality outlet centers, and the stock’s dividend currently yields a massive 6.1%. This puts SKT in a position to succeed on a number of different levels, as lower valuations and a high level of dividend protection could bring enhanced returns if the broader market starts to fail.
Of course, it is important to diversify within sectors – and this set of stocks could bring a heightened level of protection once the U.S. economy inevitably shifts back toward recession.
Disclaimer: The author and Spotlight Growth has no positions in any of the stocks mentioned in this article. Nor does either party currently have any relationship, or any other conflicts of interest, with any of the companies mentioned in this article. This content is meant for informational and entertainment purposes only and should not be meant as a recommendation to buy or sell any securities. Please visit a licensed financial representative to determine what investments are right for you.
Article By: Ric Cox