Prepare for the Bear Market: Invest in These 3 Recession-Proof Stocks Now!

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There is no debating that stock market valuations are sky high right now. While the Federal Reserve hinted at rate cuts in September at its latest Federal Open Market Committee (FOMC) meeting, that doesn’t mean that stocks are setting up for new highs. Investors searching for safe stocks for a bear market should start their preparation now.

As we get closer to the end of 2024, there are serious risks in the economy that the stock market is simply ignoring. Rising geopolitical tensions in the Middle East, tight labor market conditions, and a strong U.S. dollar are all bearish signs.

In addition, the S&P 500 Index may be topped out for the year and ripe for a correction. Technical indicators are flashing sell signals and stock market volatility is likely to persist heading into the 2024 U.S. presidential election.

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For investors looking to be on the right side of the rotation, considering the companies on this list could be a sound investment strategy.

Coca-Cola (KO)

Coca-Cola (NYSE: KO), one of the most iconic beverage companies in the world, is a top choice for those looking to prepare for a bear market in 2025. Known for its wide range of beverages and strong global presence, Coca-Cola’s essential products ensure steady demand, even in economic downturns.

When the stock market faces a downturn, consumer staples like Coca-Cola tend to outperform due to the necessity of their products. Coca-Cola’s robust dividend profile further enhances its appeal to investors seeking stability. The company has consistently increased its dividend for over 50 years, demonstrating its commitment to returning value to shareholders.

In the first quarter of 2024, Coca-Cola reported a 5% increase in net revenue, reaching $11 billion. This growth was driven by strong performance across all regions and categories. The company's North America segment saw a 3% increase in volume, while its Europe, Middle East & Africa (EMEA) segment experienced a 6% growth. Coca-Cola’s sparkling soft drinks category, which includes flagship products like Coca-Cola and Sprite, saw a 4% increase in volume globally.

Coca-Cola's commitment to innovation is also noteworthy. The company continues to expand its product offerings with new flavors and healthier options, such as low-sugar and no-sugar beverages. This strategic focus on innovation and marketing has strengthened its brand portfolio, making it a reliable choice for conservative investors. Additionally, Coca-Cola's ongoing investments in sustainability initiatives, such as reducing plastic waste and improving water usage efficiency, further enhance its long-term growth prospects.

Procter & Gamble (PG)

Procter & Gamble (NYSE: PG), a global leader in consumer goods, is another safe stock to consider for a bear market. Known for its vast array of household and personal care products, Procter & Gamble’s portfolio includes well-known brands such as Tide, Pampers, and Gillette.

Procter & Gamble has consistently demonstrated its ability to innovate and adapt to changing consumer preferences. In fiscal year 2024, the company reported a 6% increase in organic sales, driven by strong performance across all segments. The beauty segment saw a 7% increase in organic sales, led by premium brands like SK-II and Olay. The grooming segment, which includes Gillette, experienced a 5% growth in organic sales, reflecting strong demand for premium razors and grooming products.

Procter & Gamble's strategic focus on premium products and cost-saving initiatives has led to significant improvements in its financial performance. The company's adjusted gross margin expanded by 90 basis points to 51.5% in fiscal year 2024, driven by productivity gains and cost efficiencies. This growth was accompanied by a 12% increase in earnings per share (EPS), reflecting its strong operational efficiency.

The company’s commitment to returning capital to shareholders is evident in its 68 consecutive years of dividend increases. In 2024, Procter & Gamble returned $8 billion to shareholders through dividends and share repurchases. Procter & Gamble’s robust cash flow and strong balance sheet make it a resilient choice for investors seeking stability during market volatility.

Furthermore, Procter & Gamble's focus on sustainability and social responsibility initiatives enhances its appeal. The company has committed to reducing its greenhouse gas emissions by 50% by 2030 and is working towards making 100% of its packaging recyclable or reusable by 2030. These efforts not only contribute to a better environment but also strengthen Procter & Gamble's brand reputation and long-term growth prospects.

The Hershey Company (HSY)

The Hershey Company (NYSE: HSY), a leading name in the confectionery industry, rounds out this list of safe stocks for a bear market. Known for its iconic chocolate and candy brands, Hershey has a strong market presence and consistent demand for its products, even in challenging economic times.

Hershey's strategic focus on innovation and expanding its product portfolio has helped the company maintain steady growth. In the first quarter of 2024, Hershey reported a 7% increase in net sales, reaching $2.6 billion. This growth was driven by strong demand for its core brands, such as Hershey's, Reese's, and Kit Kat, as well as new product launches. The company's North America segment saw a 6% increase in sales, while its International and Other segment experienced a 9% growth, reflecting strong performance in emerging markets.

The company's commitment to cost management and efficiency improvements has also contributed to its robust financial performance. In 2024, Hershey's adjusted gross margin expanded by 80 basis points to 45%, driven by productivity gains and cost-saving initiatives. Hershey's operating income increased by 10% to $780 million, reflecting its strong operational efficiency.

Hershey's dividend profile is another reason why it is a safe choice for conservative investors. The company has a history of consistently increasing its dividend, providing a reliable income stream for shareholders. In 2024, Hershey increased its quarterly dividend by 6% to $1.14 per share, reflecting its confidence in future growth prospects. Hershey's strong free cash flow, which reached $1.2 billion in 2024, supports its ability to continue rewarding shareholders through dividends and share repurchases.

Additionally, Hershey's focus on sustainability and social responsibility initiatives enhances its long-term growth prospects. The company has committed to sourcing 100% certified and sustainable cocoa by 2025 and is working towards reducing its greenhouse gas emissions by 50% by 2030. These efforts not only contribute to a better environment but also strengthen Hershey's brand reputation and consumer loyalty.

Final Thought:

Preparing for a bear market requires careful selection of stocks that can provide stability and consistent returns. Coca-Cola, Procter & Gamble, and The Hershey Company are well-positioned to weather economic downturns, making them excellent choices for conservative investors looking to protect their portfolios in 2025. With their strong financial performance, robust dividend profiles, and commitment to innovation and sustainability, these companies offer the resilience needed to navigate uncertain markets. Investing in these safe stocks can help mitigate risks and ensure your portfolio remains solid, even during volatile times.

Disclaimer: This article is intended for informational purposes only and should not be construed as financial advice. Always conduct your own due diligence and consult with a financial advisor before making any investment decisions. The opinions expressed here are based on the analysis of available data and may not reflect the most current market conditions.

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