In the past four months, the US stock markets have found themselves in a state of havoc. The Dow Jones has now fallen almost 50% from its previous highs in 2007, NASDAQ dropped from about 2,700 to a current level of 1,400, and the S & P has also dropped in similar proprtions, from a high of 1540 in the third quarter of 2007, to a current level of 764.90. Whole companies have been wiped out in a matter of days from rapid drops, retirement funds have lost trillions of dollars, American automobile manufacturers were barely saved with emergency government funding, and the entire American banking system is on the verge of collapse.
However, the saying, “Never waste a great crisis” holds true and smart investors have found that some companies can still bring in steady profits. Let me begin by showing you this list of best performing stocks in 2008 and how their performance has followed in 2009.
S & P 500
1) Wrigley- + 36.58%
2) Family Dollar- + 35.57%
3) Anheuser- Busch – + 31.03%
4) UST- +26.61%
5) Amgen – +24.35%
Dow Jones (2 gainers)
1) Walmart- +13%
Nasdaq (8 gainers)
1) Vertex Pharmaceuticals – +30.9%
2) Amgen- +24%
3) Celgene – +18.2%
4) Ross Stores- +15.4%
5) Gilead Sciences – +11.6%
Besides a few outliers (e.g. Wrigley- acquired in 2008) there seems to be a correlation of the positive growth during the recession and the services that the respective company offers. Most of these companies offer something that people need regardless of economic conditions. Everyone knows about Walmart, but Family Dollar, a discount merchandise store which offers 90% of its products under ten dollars was quietly racking up a 201 million dollar income in 2008. At the same time, pharmaceutical companies composed 5 of a total of 8 gainers in NASDAQ. Anheuser- Busch, the beer company that brought to you Budweiser, was also enjoying a great year. You may ask, “What does a beer company have to do with a recession?” but the answer is simple. As more and more people are layed off from work, they turn to alcohol to keep their spirits high at home.
With the aforementioned facts in mind, let me give you my predictions to which stocks will come out of 2009 in one piece (and bring home some money):
– McDonald’s– The Fast Food company has lived through 5 major recessions and posted positive gains in 2008. They are a true relative strenght leader with stocks near recent highs.
– Apple- Their stocks fell recently in 2008, but strong finishes from “best in every class” products will help Apple continue their upward ascension in 2009.
– AeroVironment- Innovations in wind and other alternative energy sources could give them a major boost as the stimulus will spend lots of cash on green products and look for other energy sources.
– ExxonMobil- A sure pick for a safe investment, ExxonMobile has returned record profits 2 times in the past 4 quarters.
–Walmart- One of the most stable and growing corporations in the world, Walmart has made great corporate decisions, leaving when the market is cold and picking the right time to open new stores. They have reported 3.4% increase in sales in same stores that have been around for more than 3 years.
–Ross Stores- People are flocking to cheaper clothing stores like Ross ever since the recession started. Ross has consumer trust, a great tradition of advertising, and good values for its price.
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