In this article, we discuss 10 best hard landing stocks to buy now. If you want to see more stocks in this list, click 5 Best Hard Landing Stocks to Buy Now.
The stock market has been extremely tumultuous in the last two years, and the Fed’s relentless hike in rates indicate economic pessimism. In May, Fed Chair Jerome Powell said he couldn’t promise a so-called soft landing for the economy because of the gravity of the economic situation. And it seems he was right. That’s why long-term investors are preparing for a possible hard landing.
A hard landing refers to slower economic activity after a period of fast growth. A hard landing usually occurs when the monetary policy is tightened suddenly to keep the rapid growth and resultant inflation in check. Hard landings usually lead an economy into stagflation or recession. The Federal Reserve is now popping the wealth bubble by increasing interest rates aggressively, and Powell said that they have no intention of ceasing the increase in rates until inflation is effectively curbed.
In order to preserve money in an economy faced with a hard landing, investors seek out securities that would do well in a recessionary environment. This includes tobacco, healthcare, consumer staples, precious metals, and food stocks. Some of the best hard landing stocks to consider include McDonald’s Corporation (NYSE:MCD), Walmart Inc. (NYSE:WMT), and Johnson & Johnson (NYSE:JNJ).
Our Methodology
We picked securities that are positioned to benefit in a recessionary environment in case the soaring interest rates result in a hard landing. These stocks have solid business fundamentals and a robust history of surviving past economic crises. These companies have received positive analyst ratings recently as well, and strong hedge fund sentiment surrounds them as of Q1 2022.
Image by Sergei Tokmakov Terms.Law from Pixabay
Best Hard Landing Stocks to Buy Now
10. British American Tobacco p.l.c. (NYSE:BTI)
Number of Hedge Fund Holders: 19
British American Tobacco p.l.c. (NYSE:BTI) is a British multinational company that manufactures and markets cigarettes and nicotine products. British American Tobacco p.l.c. (NYSE:BTI) will be a primary beneficiary if JUUL’s products are taken off the market. The company is expected to consolidate its leadership position further in the U.S. e-cigarettes segment. British American Tobacco p.l.c. (NYSE:BTI)’s dividend yield of 7% and valuation are also attractive for investors. Additionally, people do not cut off smoking completely even if they shift their spending habits towards necessities, and stress amid potential unemployment and economic uncertainty can lead many people to start smoking, which bodes well for British American Tobacco p.l.c. (NYSE:BTI).
Morgan Stanley analyst Rashad Kawan on July 5 raised the price target on British American Tobacco p.l.c. (NYSE:BTI) to 4,000 GBp from 3,780 GBp and maintained an Overweight rating on the shares.
According to Insider Monkey’s Q1 data, 19 hedge funds were bullish on British American Tobacco p.l.c. (NYSE:BTI), with combined stakes worth about $2.3 billion, compared to 18 funds in the earlier quarter, holding stakes in the company valued at about $1.5 billion. Rajiv Jain’s GQG Partners is the largest shareholder of British American Tobacco p.l.c. (NYSE:BTI), with 29 million shares worth $1.2 billion.
In addition to McDonald’s Corporation (NYSE:MCD), Walmart Inc. (NYSE:WMT), and Johnson & Johnson (NYSE:JNJ), elite hedge funds are piling into British American Tobacco p.l.c. (NYSE:BTI).
Here is what Distillate Capital has to say about British American Tobacco p.l.c. (NYSE:BTI) in its Q1 2022 investor letter:
“Distillate Capital’s International FSV Strategy is less expensive, more fundamentally stable, and less levered than the benchmark All Country World Ex U.S. (ACWI-EX US) Index.The largest new position is British American Tobacco (NYSE:BTI), which was not owned previously due to leverage, but now passes that threshold and offers an 11% free cash flow to market cap yield.”
9. Coeur Mining, Inc. (NYSE:CDE)
Number of Hedge Fund Holders: 20
Coeur Mining, Inc. (NYSE:CDE) is an American precious metals mining company that extracts and distributes silver and gold. As the stock market has crashed so far in 2022, investors and laymen alike look towards preserving their money in the form of gold. This bodes well for companies like Coeur Mining, Inc. (NYSE:CDE).
Canaccord analyst Dalton Baretto on May 6 upgraded Coeur Mining, Inc. (NYSE:CDE) to Buy from Hold with an unchanged price target of $5.50 after the Q1 results and liquidity update. The company reported a strong quarter and its balance sheet looks solid ahead of a “capital-heavy” 2022 and 2023, the analyst told investors. The analyst thinks liquidity concerns have weighed significantly on Coeur Mining, Inc. (NYSE:CDE)’s share price this year. He sees the present share price as an attractive buying point given Coeur Mining, Inc. (NYSE:CDE)’s improved liquidity profile.
According to Insider Monkey’s first quarter database, 20 hedge funds reported long positions in Coeur Mining, Inc. (NYSE:CDE), up from 14 funds in the last quarter. D E Shaw is the leading shareholder of the company, with more than 5 million shares worth $22.2 million.
8. Kinross Gold Corporation (NYSE:KGC)
Number of Hedge Fund Holders: 22
Kinross Gold Corporation (NYSE:KGC) is a Canadian gold and silver mining company, with mines located in Brazil, Ghana, Mauritania, and the United States. On June 30, Stifel analyst Ingrid Rico reaffirmed a Buy rating on Kinross Gold Corporation (NYSE:KGC) and lowered the price target on the shares to C$11 from C$11.50. On June 16, Canaccord analyst Carey MacRury also maintained a Buy recommendation on the stock but cut the price target on Kinross Gold Corporation (NYSE:KGC) to C$11 from C$12 to account for the company exiting Russia. However, the analyst’s estimates for the stock remain unchanged.
According to Insider Monkey’s records, 22 hedge funds were long Kinross Gold Corporation (NYSE:KGC) at the end of Q1 2022, with collective stakes worth $276.4 million. Jim Simons’ Renaissance Technologies held the leading position in the company, comprising 24.60 million shares worth $144.6 million.
7. Corteva, Inc. (NYSE:CTVA)
Number of Hedge Fund Holders: 39
Corteva, Inc. (NYSE:CTVA) was incorporated in 2018 and is headquartered in Indianapolis, Indiana. It operates in the agriculture sector, with two primary segments – Seed and Crop Protection. Corteva, Inc. (NYSE:CTVA) is operating in the essential products market which makes it a suitable investment for hard landing scenario. The shares have gained about 10% year to date as of July 5.
Barclays analyst Benjamin Theurer initiated coverage of Corteva, Inc. (NYSE:CTVA) on June 1 with an Overweight rating and a $71 price target. The analyst sees long-term supply/demand tightness beyond 2023, which he said will benefit the broader group despite outperformance against major indexes.
The Q1 database of Insider Monkey suggests that 39 hedge funds were bullish on Corteva, Inc. (NYSE:CTVA), compared to 42 funds in the earlier quarter. Jeffrey Smith’s Starboard Value LP is the largest shareholder of the company, with roughly 6 million shares worth $344.6 million.
Here is what Aristotle Capital Management Value Equity has to say about Corteva, Inc. (NYSE:CTVA) in its Q1 2022 investor letter:
“Corteva Agriscience, one of the world’s largest seed and crop protection companies, was a primary contributor for the quarter. Due to its respected brand and the value-added benefits of its patented seeds and crop protection solutions for farmers, Corteva has been able to more than offset input cost inflation with sustainable price increases. In addition, the company’s ongoing mix shift to higher-margin, premium products, a catalyst we previously identified, is aiding both sales and profit growth. Shares were likely also buoyed by the rise in crop prices. Market participants, perhaps eager to chase short-term trends, poured into the sector. At Aristotle Capital, we look past such gyrations and, as long-term investors, do not attempt to predict short-term changes in commodity prices. We remain excited about what we view to be high-quality characteristics and fundamental improvements that permeate Corteva’s business, not the least of which include its pricing power.”
6. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 53
Dollar General Corporation (NYSE:DG) is an American discount retailer that sells household and consumable products. In a recessionary environment, consumers naturally gravitate towards discount products, which is a positive sign for Dollar General Corporation (NYSE:DG). The stock has climbed about 6% year to date as of July 5.
On June 16, Morgan Stanley analyst Simeon Gutman upgraded Dollar General Corporation (NYSE:DG) to Overweight from Equal Weight, raising the price target to $250 from $225. The analyst said that Dollar General Corporation (NYSE:DG) fits his preferred idea of “favoring quality, defensive retailers with offensive characteristics”. It could be the most defensive, counter-cyclical company in the space but its stock is in-line with other defensive retail names in terms of performance, the analyst informed investors. He sees an attractive risk/reward skew, with 50% upside in his $340 bull case and 25% downside in his $175 bear scenario.
In Q1 2022, 53 hedge funds reported long positions in Dollar General Corporation (NYSE:DG), up from 44 funds in the preceding quarter. William B. Gray’s Orbis Investment Management is the biggest shareholder of the company, with 2.3 million shares worth $519.2 million.
Like McDonald’s Corporation (NYSE:MCD), Walmart Inc. (NYSE:WMT), and Johnson & Johnson (NYSE:JNJ), institutional investors are monitoring Dollar General Corporation (NYSE:DG) amid fears of a hard landing.
Here is what LRT Capital Management has to say about Dollar General Corporation (NYSE:DG) in its Q3 2021 investor letter:
“Executive Summary
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General (DG), so today, we wanted to tell you a bit about this great company.
Company Overview
Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”. As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation.
The first Dollar General store opened on June 1st, 1955 in Springfield Kentucky. The simple concept was that no item in the store would cost more than one dollar. The company changed its name to Dollar General Corporation in 1968 when Dollar General became publicly traded. At the time of its initial public offering, the business generated more than $40 million in annual sales. The company’s common stock was publicly traded from 1968 until July 2007, when it was taken private by KKR. The company went public again in November 2009, under the ticker DG.
Today, Dollar General is an evolved, and phenomenal business with more room for growth. Annual sales reached a record $33.7 billion in fiscal year 2021 after consecutively growing the top line for many years. The company’s main products are every-day necessities and consumables purchased by lower income consumers on tight budgets…”
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Disclosure: None. 10 Best Hard Landing Stocks to Buy Now is originally published on Insider Monkey.
