Trade Down Brands Offer Compelling Value
In a stock market as terrible as this one has been over the last year, what is an investor to do? Preserving wealth is a premium here and one way to do that is being buying defensive companies. A defensive stock buy generally falls into two categories; the things that people will need to live no matter how bad the economy gets or a company that offers a cheaper substitute. The first category is typified by the likes of Procter & Gamble (PG), Kimberly-Clarke (KMB) and Colgate-Palmolive (COL) because people will not forgo the basics of personal hygiene until all is truly lost, and although it feels that way sometimes, we are not there. The trade-down brands are also defensive for this market, some examples of those would be McDonalds (MCD), Walmart (WMT), or Treehouse Foods (THS). Jim Cramer, on CNBC’s Mad Money last night, pointed out the fact that the trade down defensive stocks are still the way to go,
“In this market, when Procter & Gamble goes down, FedEx or Norfolk Southern goes down, too. When Colgate plummets, so do IBM and Hewlett-Packard. That’s not supposed to happen.
Related Stories
The above story is the opinion of the author only and it does not reflect
iStockAnalyst opinion. Further, the author is not personally advising you
regarding the suitability of the story for your investment needs. In no event
iStockAnalyst will be liable for any loss or damage including without
limitation, indirect or consequential loss or damage, or any loss or damage
whatsoever arising from or arising out of, or in connection with the use of this
information. Please consult your investment advisor before making any investment
decision.
