There is no debating that stock market valuations are sky high right now. While the Federal Reserve hinted at rate cuts in September at its latest Federal Open Market Committee (FOMC) meeting, that doesn’t mean that stocks are setting up for new highs. Investors searching for safe stocks for a bear market should start their preparation now.
As we get closer to the end of 2024, there are serious risks in the economy that the stock market is simply ignoring. Rising geopolitical tensions in the Middle East, tight labor market conditions and a strong U.S. dollar are all bearish signs.
In addition, the S&P 500 Index may be topped out for the year and ripe for a correction. Technical indicators are flashing sell signals and stock market volatility is likely to persist heading into the 2024 U.S. presidential election. For investors looking to be on the right side of the rotation, considering the companies on this list could be a sound investment strategy.
PepsiCo (PEP)
PepsiCo (NASDAQ:PEP), an American multinational food and beverage giant, stands as one of the best safe stocks for a bear market in 2025. With strong brand recognition and a history of returning value to shareholders, PepsiCo’s product portfolio of essential goods makes it a resilient choice during uncertain markets.
When the stock market is facing a downturn, investors often turn to companies in the consumer staples sector. This is due to the nature of their business models, which sell essential products to consumers. Even when consumers cut back on spending, essential food and beverage items will remain in demand.
PepsiCo’s impressive dividend profile will provide peace of mind and foster resilience in an investment portfolio. In the first quarter, the company increased its quarterly dividend by 7% to $1.35 per share. This increase marked its 52nd consecutive increase, a testament of its commitment to rewarding its shareholders.
PepsiCo has successfully navigated multiple recessions in the U.S. and come out much stronger. With 4% organic revenue and 8% earnings per share (EPS) growth forecasted for fiscal year 2024, PEP stock can provide safety for investors going into 2025.
Waste Management (WM)
Waste Management (NYSE:WM), one of the largest waste disposal and recycling companies in the world, is another top pick for investors seeking safe stocks for a bear market. The waste management sector is non-cyclical, making its business relatively recession-proof.
Waste Management is a great business in the environmental services sector that is both stable and innovative. Over the last three years, the company’s enhanced operational efficiency contributed to notable EBITDA expansion. Its focus on its collection and disposal business led this segment to grow by $422 million, reaching $6.64 billion in fiscal year 2023. In addition, adjusted EBITDA margin and free cash flow have remained strong in 2024.
CEO James Fish is executing on all cylinders, targeting acquisitions in new geographies for Waste Management’s collection and disposal business. In 2024’s Q2, revenue increased 5.5% year-over-year (YOY) to $5.4 billion. Adjusted EBITDA increased by 10.3% to $1.62 billion, with adjusted EBITDA margin up 130 basis points to 30%.
With continued investments into its renewable energy business in 2024, WM stock can provide investors with growth and stability during a bear market.
Mondelez International (MDLZ)
Mondelez International (NASDAQ:MDLZ), another consumer staples juggernaut, rounds out this list of safe stocks for a bear market. As one of the largest food and beverage companies in the world, Mondelez is a desirable company to own when stock market volatility rises.
If you live in North America, there is a strong likelihood that you have consumed Mondelez products. It owns world class brands such as Ritz, Oreo, Chips Ahoy, Wheat Thins and Triscuit that are all well received by its customer base. The company’s global distribution network and strong presence in the snack segment has enhanced its cash flow profile over the last several decades.
Mondelez is coming off an incredible operational year in 2023. In fiscal year 2023, revenue rose 14% to $36.01 billion, with EPS swelling 85% YOY to $3.62 per share. Additionally, its free cash flow grew 19% from the year prior to $3.62 billion. Mondelez’s strategic pricing initiatives and cost discipline has led to stronger margins and liquidity. Despite weaker second quarter earnings, its 11% dividend hike to 47 cents per share signals strength in the business moving forward.
On the date of publication, Terel Miles did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not hold (either directly or indirectly) any positions in the securities mentioned in this article.