Why would you hunt down the best stocks to buy now for a downturn when the markets are at all-time highs?
The current bull market – currently fueled by cheap money from the Federal Reserve, another stimulus plan and, most importantly, the hopes that some day in the nebulous future, we’ll have COVID under control – is going to end. Every bull market does.
That’s not why, however. That end, which would occur with a 20% decline from a market peak, could be a long time coming. The reason why is that even a mere correction, which is a decline of between 10% to 20%, would be enough to rack up sizable losses and shake investor confidence. And several market watchers see the potential for a correction in the coming months.
“Overall, we still believe U.S. equities in general remain vulnerable to a bigger correction than we have experienced thus far- and that this could materialize in Q1 or Q2 with upwards of a -10-15% repricing off the recent highs,” says Dan Wantrobski, technical strategist at Janney Montgomery Scott.
“The message from market sentiment and positioning indicators is that equities are ripe for a correction,” adds BCA Research.
Naturally, it’s better to have an escape plan before you need it. So if at some point the “hopium” disappears, you’ll want to be exposed to more defensive stocks – companies that sell vital goods and services, have reliable earnings and, where possible, pay dividends. Almost everything is overvalued now, but these kinds of stocks should hold their value better in a downturn than the rest of the market.
Read on as we discuss 11 of the best stocks to buy now if you want to add some protection against future turbulence. Three specific areas of the market stand out right now: digital infrastructure stocks, healthcare providers and consumer staples stocks – all areas of the market that will be in demand no matter what happens over the next few months.
Data is as of Feb. 4. Dividend yields are calculated by annualizing the most recent payout and dividing by the share price.
- Market value: $206.2 billion
- Dividend yield: 7.2%
- Industry: Telecommunications
AT&T (T, $28.89) admittedly made some of the worst business mistakes of the last decade, buying both DirecTV and Time Warner. The idea was to get more from its Internet services by adding content to them, but so far, that hasn’t worked out quite as planned.
Veteran AT&T executive John Stankey became CEO in July 2020. He replaced Randall Stephenson, who made those bad decisions. His first move was to consolidate the company’s entertainment assets around HBO Max, a streaming service that competes with Netflix (NFLX). This meant, among other things, releasing theatrical movies online at the same time they go into theaters.car It’s a risk – more people might sign up for HBO Max in the short-term, but top producers, directors and stars might be less willing to sign…