by winston » Sat Mar 12, 2016 9:57 am
One of the Best Stocks to Buy Before a Recession Hits
"'Must-have' investments are companies making products that are tapped into trillions of dollars in spending that make them as recession-proof as possible," said Fitz-Gerald.
"What's more, because they provide services that draw their demand from human nature's roots themselves, there will be a market for them, in good times and bad, for as long as civilization itself is around."
That's why now he likes the massive defense contractor Lockheed Martin Corp. (NYSE: LMT) as recession insurance for 2016.
Created from a merger between two aerospace companies in 1995, Lockheed Martin is one of the world's leading corporations in the aerospace, defense, security, and technology industry.
Lockheed only dipped an average of 30% entering the Great Recession, beating the average losses of the S&P 500 by 10% during the same period.
Since 2008, Lockheed has gained over 250% to where it sits today, at $216 per share. That's over 100 points higher than the price it was averaging right before the Great Recession.
Lockheed benefits from the $580 billion annual U.S. defense budget that our politicians hate to cut, according to Fitz-Gerald.
Unlike most other companies, Lockheed's extensive work with the U.S. and foreign governments means that its profit margins are "baked in" at 7.8%, according to Fitz-Gerald.
In other words, by working with governments, Lockheed has an almost guaranteed demand for its services. That assures it maintains a strong profit margin, even when times get tough.
As the world gets more dangerous, Lockheed profits. And – sad but true – it looks like times are only getting worse as tensions in the Middle East and terrorist threats escalate. In fact, Lockheed just extended a huge $60 million contract with the U.S. Navy on Feb. 25, which sent its stock up 2% the following day.
And we expect Lockheed to land plenty more deals like this in the coming months, as the United States ramps up its military efforts in the Middle East.
Another reason to consider Lockheed as recession insurance is because of its dividend, which it has raised every year since 2003. The $0.12 quarterly dividend it had in 2003 is now $1.65. That's an increase of $1,275% in 13 years.
"Management has a history of dramatically increasing payouts," Fitz-Gerald said in support of Lockheed Martin stock. "Plus, the company is tapped into what I like to call an Unstoppable Trend – War, Terrorism, and Ugliness. That's one of the biggest Unstoppable Trends of all."
Source: Money Morning
It's all about "how much you made when you were right" & "how little you lost when you were wrong"