Weathering a Storm - 3 Stocks That Stood the Test of Time

Fuel has been added to the fire again. Credit Suisse has revived fears of a banking crisis. Their biggest shareholder, “The Saudi National Bank,” told news outlets that it would not put more money into the Swiss Lender. This is so that The Saudi National Bank can avoid regulations kicking in if they have more than a 10% stake in Credit Suisse. After this, the share price of Credit Suisse shares lost more than a quarter of its value. This prompted a trading halt and sent other European Bank stocks to tumble.

Today, Credit Suisse has been handed a lifeline in the form of a 50 billion Swiss Franc credit facility. While it might calm the fear gauge, investors prefer hearing about earnings beats rather than lifelines.

Just as the financial crisis of 2008 continued to unfold, investors should continue to be on the defensive and keep risk management a priority. As history has shown us repeatedly, these times of crisis are when we get to see which companies are strong enough to weather the storm. Numerous financial crises like the Great Depression, the 1970s oil crisis, the 2000 dot-com bubble, and the 2008 housing market crash are some of the crises that put many companies' (and investors' risk appetite) to the test.

This article will discuss some companies that have become household names and survived multiple financial crises.

Johnson & Johnson (JNJ)

Johnson & Johnson is a multinational corporation based in New Brunswick, NJ that manufactures and sells health-related products and services. It is also one of the world's most valuable corporations, employing more than 140,000 active employees.

JNJ's operations are segmented into three groups:

• Consumer Health: Provides products based on science and approved by medical experts to help people improve their health.
• MedTech: Diverse healthcare expertise and purposeful, innovative technology help save lives and aim to create a future where healthcare solutions are smarter, less intrusive, and more personalized in surgery, orthopedics, and interventional solutions.
• Pharmaceutical: Products distributed through the Janssen Pharmaceutical Companies. Janssen envisions a future in which disease prevention, early detection, treatment, and cure will change thanks to its cutting-edge biologics and other medical components.

JNJ's annual dividend yield is 2.94% which is modest for most investors. JNJ has a 5-year dividend growth of 34.04%. JNJ has been continuously increasing its dividend for 61 years. The company is both a Dividend Aristocrat and Dividend King. Based on JNJ's historical announcements, their next dividend announcement should be around the 2nd-3rd week of April.

Analyst Recommendations

Analysts issued Johnson & Johnson a “Moderate Buy” rating based on 7 Strong Buys, 1 Moderate Buy, and 10 Holds from their recommendations. JNJ has a mean Target of $183.59 with a High Target of $215.00, an upside of 39.29%.

How Johnson & Johnson weathered previous crises

Johnson & Johnson survived various financial crises by diversifying its products and focusing on research and development that will help communities in the long run. During the Great Depression, the JNJ introduced a line of baby products, which proved to be a huge success. In the 1970s, when the oil crisis caused a recession, JNJ diversified into pharmaceuticals, which helped it weather the storm. And during the dot-com bubble, it continued to invest in research and development and focus on its core business which helped it stay ahead of the competition.

The Coca-Cola Company (KO)

The Coca-Cola Company is a multinational beverage conglomerate that produces, markets, and sells alcoholic and nonalcoholic drinks. It has over 200 brands available throughout the world. Additionally, the company offers its products in more than 200 countries. 

The Coca-cola company is best known for its nonalcoholic sugary drink, Coca-cola, which was invented by John Stith Pemberton in 1886, and Asa Griggs Candler was the founder of the company. Its

headquarters are located in Atlanta, Georgia, U.S. Currently, it employs over 82,5000 active employees. 

KO has various brands and products in its portfolio in categories like

• Non-alcoholic Sparkling Soft Drinks: Coca-Cola, Sprite, Fanta, Diet Coke /Coca-Cola Light, and Coca-Cola Zero Sugar.
• Water, Sports, Coffee, and Tea: Quarius, Ayataka, BODYARMOR, Ciel, Costa, Dogadan, etc.
• Juice, Dairy, and Plant-based Beverages: Minute Maid, Minute Maid Pulpy, AdeS, Del Valle, Fairlife, etc.

Analyst Recommendations

Analysts issued Coca-cola a “Strong Buy” rating based on 8 Strong Buys and 3 Holds based on their recommendations. KO has a mean Target of $68.81 with a High Target of $76.00, an upside of 25.77%.

How Coca-cola weathered previous crises

Coca-Cola has survived these crises by focusing on marketing and diversifying its products. For example, over the years, KO diversified into other beverages, which included juice and water. And during the dot-com bubble, KO continued introducing new products, including Vanilla Coke and Coca-Cola Zero, and established its presence as a household name with its strong marketing.

Procter & Gamble (PG)

The Procter & Gamble Company is a diversified American multinational consumer goods company that offers a variety of products for personal hygiene and health. The company was founded in 1837 and currently employs over 106,000 active employees. It is headquartered in Cincinnati, Ohio, United States. PG operates through five industry-based sectors: 

• The Baby, Feminine, and Family Care segment provides baby wipes, diapers, paper towels, tissues, toilet paper, and feminine care items.
• The Beauty segment offers items for skin care and hair care.
• The Health Care segment sells instant diagnostics, vitamins, minerals, and other personal healthcare items, as well as dental and oral care items.
• The Grooming segment markets various shaving products, such as female and male blades, razors, and products used before and after shaving.
• The Fabric and Home Care segment markets air care, dish care, fabric enhancers, laundry additives, and detergents.

Procter & Gamble Company’s annual dividend yield is 2.61%, with a 5-year dividend growth rate of 30.37%. PG has continuously increased its dividend for 67 years and is among the elite dividend kings. PG is expected to announce its next dividend on the 2nd-3rd week of April based on its historical announcement.

Analyst Recommendation

Analysts gave PG a “Strong Buy” coming from 9 Strong Buys, 2 Moderate Buys, and 2 Holds from their recommendations. The mean target price is $161.01, and a high price target of $170.00, an upside of 19.86%.

How Procter & Gamble weathered previous crises

Procter & Gamble has survived these crises by focusing on research and development and its core businesses and investing in them. Over the years, the company introduced Tide laundry detergent and other products that helped Proctor & Gamble stay ahead of the competition.  

Final Thoughts

Choosing companies that survived various economic downturns throughout history is one of the critical ways of surviving this ongoing contagion in the banking sector. Companies willing to adapt and be resilient regardless of economic conditions deserve a spot in any investor portfolio. The only question to ask now is, which one should you add?

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