Safe Stocks for Uncertain Times: Navigating Market Volatility

Consumer Staples: Essential Goods

Consumers are becoming more selective due to rising costs, yet demand for strong brands like those from Colgate-Palmolive, Coca-Cola, and Procter & Gamble remains robust. Companies like PepsiCo and Kimberly-Clark are focusing on innovation and value to meet consumer needs, ensuring stability in the consumer staples sector during market volatility.

"First, we're hearing in general that the consumer has to more and more make choices, right, in terms of what they buy as the cost of staples, utilities rent is up." --- (CL, conference, 2024/06/11)

"Behind us, we've got many of the company's brands, some of or if not the strongest brands in consumer staples." --- (KO, conference, 2024/06/20)

"Consumer demand for P&G brands remains very strong in the U.S., with all outlet consumption value growth of 5%, all outlet value share was up 10 basis points versus prior year." --- (PG, earning call, 2024/Q3)

"So do you see different behaviors happening everywhere, I think the connecting line it would be, the consumer is more cautious, the consumer is more choiceful, but the consumer is willing to spend in areas where they see value and we see it in our category, right, the more -- the parts of the category there I was referring to." --- (PEP, earning call, 2024/Q2)

"To harness these strengths, we will sharpen our strategic focus to accelerate pioneering innovation, to capture the significant growth available in categories by solving big unmet consumer needs optimize our margin structure to deliver superior consumer propositions at every rung of the good, better, best ladder and wire our organization for growth to help make our enterprise stronger and faster." --- (KMB, conference, 2024/06/04)

Healthcare Sector Resilience

Merck's geographic production strategy, UnitedHealth's cyberattack response, AbbVie's regulatory risks, Johnson & Johnson's consumer behavior impacts, and Pfizer's AI-driven innovation collectively highlight the healthcare sector's resilience through strategic adaptations, technological advancements, and risk management amid market volatility.

"Susanna Schaffert: Mr. Provo, you also asked whether Merck could encounter scaling problems in production if in accordance with the resilience strategy, production is divided geographically and in particular whether this also applies to healthcare." --- (MRK, event transcript, 2024/04/26)

"In the first quarter 2024, as a result of the Change Healthcare cyberattack, we incurred $340 million of medical costs related to the temporary suspension of some care management activities, impacting our UnitedHealthcare and Optum Health businesses, to help care providers with their workflow processes." --- (UNH, sec filing, 2024/Q1)

"We believe that the process that our proposal seeks would be beneficial to AbbVie because extended exclusivity periods gained from secondary patents and the resulting delay in generic entry limit patient access and saddle the healthcare system with unsustainable costs, thereby creating potential regulatory and reputational risk for the company. Companies like AbbVie play an important role in developing new and improved medicines for the benefit of society." --- (ABBV, event transcript, 2024/05/03)

"Changes in the behavior and spending patterns of purchasers of healthcare products and services, including delaying medical procedures, rationing prescription medications, reducing the frequency of physician visits and foregoing healthcare insurance coverage, as a result of the current global economic downturn, may continue to impact the Company’s businesses." --- (JNJ, sec filing, 2024/Q1)

"especially artificial intelligence. Digital capabilities and AI are transforming healthcare, accelerating our ability to bring new breakthroughs to patients everywhere. For years, Pfizer has been harnessing digital and AI across the entire company to drive innovation and productivity on a global scale." --- (PFE, event transcript, 2024/04/25)

Utilities: Essential Services

Utilities provide essential services by meeting new demand, ensuring clean, safe, reliable, and affordable energy, and maintaining a stable customer base. Their commitment to safety and reliability, coupled with a growth mentality, underscores their stability and importance during market volatility.

"And relationships with utilities are more important than ever to meeting this new demand, as customers need both behind the meter generation and power from the grid, which provides NextEra with a 2 pronged opportunity: 1, to satisfy that behind the meter generation 2, to work with utilities to provide more power to the grid to accommodate all of that demand." --- (NEE, Investor Day, 2024/06/11)

"When it comes to utility regulation, our states are among the best in the country at balancing the needs of customers while helping ensure utilities provide real value to customers in the form of clean, safe, reliable and affordable energy." --- (SO, earning call, 2024/Q1)

"The Utility Registrants' distribution services are provided to an established and diverse base of retail customers." --- (EXC, sec filing, 2024/Q1)

""Know that we are following industry standards and federal requirements to ensure the health of the trees while also ensuring the integrity of power lines to continue providing the safe, reliable service we all depend on." It is important to remember that customers, property owners and untrained contractors should not prune or cut trees and plants near power lines." --- (DUK, press release, 2024/04/19)

"We have nurtured a growth mentality across our entire company. And keep in mind that we are a part of a larger we, Nexstar Energy and Florida Power and Light Company, which is often recognized as one of the best utilities in this country.We deliver not just power." --- (NEE, Investor Day, 2024/06/11)

Dividend-Paying Stocks for Stability

Dividend-paying stocks like Procter & Gamble, Johnson & Johnson, AT&T, and PepsiCo offer stability during market volatility. These companies demonstrate financial strength through substantial dividend payments, increases, and stock buybacks, ensuring consistent and growing returns to shareholders.

"We expect adjusted free cash flow productivity of 90%, and we expect to pay more than $9 billion in dividends to repurchase $5 billion to $6 billion in common stock, combined a plan to return $14 billion to $15 billion of cash to share owners for the year." --- (PG, earning call, 2024/Q3)

"Dividends On January 2, 2024, the Board of Directors declared a regular cash dividend of $1.19 per share, payable on March 5, 2024, to shareholders of record as of February 20, 2024." --- (JNJ, sec filing, 2024/Q1)

"Dividends on the common stock and Series A and Series C preferred stock are payable on August 1, 2024, to stockholders of record of the respective shares at the close of business on July 10, 2024." --- (T, press release, 2024/06/26)

"In addition, on February 9, 2024, we announced a 7% increase in our annualized dividend to $5.42 per share from $5.06 per share, effective with the dividend paid in June 2024." --- (PEP, sec filing, 2024/Q2)

"And I know your free cash flow has been quite strong. You announced a dividend increase recently and certainly buying back your stock." --- (PG, conference, 2024/05/14)

Companies with Strong Balance Sheets

Apple, Berkshire Hathaway, Microsoft, and Google exemplify companies with strong balance sheets. Apple emphasizes prudent leverage and robust liquidity, Berkshire Hathaway focuses on maintaining a strong cash balance, Microsoft benefits from increased interest and dividends income, and Google effectively manages significant liabilities.

"I'm just wondering, how do you think about leverage on your balance sheet over time and what sort of leverage do you think you'd be comfortable taking on? Operator: Our next question is from David Vogt with UBS. Please go ahead." --- (AAPL, earning call, 2024/Q2)

"Well, I Tim O'Shaughnessy: thought there was a lot of focus on cash and the importance of making sure that the cash balance at Berkshire continues to be strong." --- (BRK.B, AGM, 2024/05/04)

"Nine Months Ended March 31, 2024 Compared with Nine Months Ended March 31, 2023 Interest and dividends income increased due to higher yields and higher portfolio balances." --- (MSFT, sec filing, 2024/Q3)

"While each EC decision is under appeal, we included the fines in accrued expenses and other current liabilities on our Consolidated Balance Sheets as we provided bank guarantees (in lieu of a cash payment) for the fines." --- (GOOG, sec filing, 2024/Q1)

"Liquidity and Capital Resources The Company believes its balances of cash, cash equivalents and unrestricted marketable securities, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond." --- (AAPL, sec filing, 2024/Q2)

Technology Giants with Diversified Revenue

Technology giants like Microsoft, Google, Amazon, and Apple are diversifying their revenue streams through AI integration, cloud services, and robust growth in services and retail verticals. This diversification helps them navigate market volatility effectively.

"Microsoft Corporation (NASDAQ:MSFT), global leader in developing and supporting software, services, devices and solutions, announced new computers called 'Copilot+' PCS, with the company's AI tech directly into them, serving to further boost the race among tech giants to push out AI tools to the public." --- (MSFT, press release, 2024/05/23)

"Search and other revenues grew 14% year-on-year, led again by solid growth in the retail vertical, with particular strength from APAC-based retailers, which began in the second quarter of 2023." --- (GOOG, earning call, 2024/Q1)

"Covered a lot of ground with @jonfortt today, from AWS’s multibillion-dollar AI business & rapid innovation for customers, to our $100B annualized revenue run rate milestone." --- (AMZN, Twitter, 2024/05/02)

"high and customer satisfaction was recently measured at 95% in the U.S. In services, as I mentioned, total revenue reached an all-time record of $23.9 billion, growing 14% year-over-year with our installed-base of active devices continuing to grow at a nice pace." --- (AAPL, earning call, 2024/Q2)

"Next, the Intelligent Cloud segment. Revenue was $26.7 billion, increasing 21%, ahead of expectations with better-than-expected results across all businesses. Overall, Server products and cloud services revenue grew 24%." --- (MSFT, earning call, 2024/Q3)