Recession jitters have investors on edge. Inflation just hit a new 40-year high of 8.6% and economists say it could hit 9% very soon. Gasoline now costs over $5 a gallon and is expected to jump to $6 a gallon. The Federal Reserve is poised to raise interest rates again and according to one poll of CFOs, a recession is imminent and there’s no way it can be avoided.
There’s good reason the S&P 500 is down some 20% year to date, slipping bear market territory.
Yet as bad as all those economic indicators are, it’s important to note that the sunlight always follows the storm and a bull market comes on the heels of a sharp correction. Savvy investors have been keeping some powder dry for just such circumstances so they can swoop in and scoop up shares of companies that have been trading at rich valuations, but are now affordable or are about to become so.
The following US stocks are ones you ought to have on your radar this month.
asset manager Franklin Resources (BEN 0.52%† runs the Franklin Templeton family of funds, among others, and had about $1.5 trillion in assets under management at the end of its fiscal second quarter in March. That actually reflected a net outflow of $11.7 billion, but it’s not a surprising development considering the macroeconomic factors in play.
While the stock has lost nearly 40% of its value from recent highs, the company remains financially solid. Profits were down in the quarter because the company makes money by charging fees on the assets it manages, and with the market tumbling, investors are growing cautious.
Franklin, however, continues to shore up its base and resources. It recently bought private equity firm Lexington Partners, an alternative asset firm that bolsters Franklin’s existing capabilities in real estate, private credit, and hedge fund strategies, and then announced two weeks ago it was buying BNY Alcentra Group from Bank of New York Mellongiving it access to one of the largest European credit and private debt managers.
Franklin Resources will be able to hit the ground running when the markets turn once more, and investors will be able to go along for the ride. The asset manager has increased its annual dividend for 41 straight years after hiking the payout 4% last week to $0.29 a share. That record qualifies Franklin Resources as a Dividend Aristocrat, and with its dividend yielding 4.7% annually, it gives investors a chance to prosper during bull markets and protect their own bottom line during downturns.
You’re likely going to hear a lot about food services giant Sysco (SYY 0.61%† as it provides customers in the restaurant, concession, hospitality, and institutional food businesses with delivery and distribution services. Obviously those companies are feeling the heat from rising commodity costs, and Sysco’s own costs are going to go up as fuel costs rise. And yet, it’s still running strong.
The food services leader reported last month it hadn’t seen any let up in demand from its customers, and because it services restaurants at all price points, it has a certain amount of protection in the form of diversification. Moreover, Sysco says rising food costs make eating out not the expensive proposition it might otherwise seem compared to dining in.
Because Sysco is the largest foodservice distributor, its broad network has allowed it to avoid many of the problems others have experienced due to supply chain bottlenecks. That’s allowed it to grow its market share to 17% in a highly fragmented industry and to raise its full-year profit guidance to between $3.16 to $3.26 per share, up from $3 to $3.10 per share.
Sysco also has paid a dividend every year since going public in 1970 and has raised it for 52 consecutive years, making it a Dividend King. This is a stock to watch in June and beyond.