Market crashes are unavoidable. There’s no getting around them. Once you understand this truth, your fearful waiting — let alone the actual happening — turns into a lot less worrying. With time to prepare and change their portfolios, investors can withstand the storm of a downturn a lot better.
But how do you do this? You’ll want to consider purchasing stocks that can bolster your portfolio — stocks like American Water Works, Royal Gold and Waste Management.
1. American Water Works
This company is often seen as a go-to choice for people wanting conservative options for strengthening their portfolios, utility stocks are usually in regulated markets that give investors good visibility into future income.
The company’s regulated segment has been 86% of the company’s total revenue in the past three years. American Water Works is confident in forecasting how much money they will make given their customer base and water usage statistics. The company expects to increase EPS at a compound growth rate of 7% to 10% between now and 2025 from the current $3.91.
2. Royal Gold
Investors also turn to gold stocks to save them from downturns. Whereas mining companies mine the gold, royalty companies like Royal Gold provide the funding for the mining companies. Royalty firms then maintain the rights to buy a certain amount of gold (or another metal) at a lower price, or get a percentage of the asset’s mineral production.
Royal Gold is very lucrative for this reason. Over the previous 10 years, for example, Royal Gold has convincingly beaten the price of gold and top mining companies.
Although Royal Gold is founded on the yellow metal for most of its income — around 79% last year — the company also gets access to other metals, including silver and copper. Investors then also benefit in an increase in the prices of these additional commodities.
3. Waste Management
Waste Management is the largest publicly traded waste-management firm in the country. During a market collapse, companies will likely cut back on expenses, but it’s very unlikely that stopping trash collection is something they would do.
2021 has started off strong for Waste Management, with the company beating analysts’ expectations across the board, with revenue of $4.1 billion and adjusted EPS of $1.06 in the first quarter of 2021, while Wall Street anticipated the company to produce sales of $4 billion and adjusted EPS of $1.01.
Based on Waste Management’s overall performance, its management team increased its 2021 guidance. Before it had forecasted y/y revenue growth of around 11%, but now it expects to grow revenue around 13%.
Author: Scott Dowdy