The idea of targeting bulletproof stocks to prepare for market volatility might seem like overkill.
After all, the Labor Department revealed the U.S. economy added 263,000 jobs in November, well above analysts' expectations. However, it also means that the Federal Reserve's efforts to tackle money supply expansion took a massive hit.
Let's just get down to the brass tacks:
With more people gainfully employed, this equates to more dollars chasing after fewer goods. Add in the impact of global supply chain disruptions and this inflationary situation becomes even more worrisome.
Therefore the Fed will probably respond with aggressive rate hikes in 2023. But going too aggressive could spark a recession.
That's why we think investors should still consider targeting these four industry titans that can weather any coming storm.
Home Depot (HD)
While hardly the most exciting idea you really can’t go wrong with Home Depot (NYSE:HD). At the end of the day, it’s “just” a retailer. But on a practical level, the company represents critical infrastructure. They tend to stay open during weather emergencies as a public service.
And Home Depot really came alive when it stayed open for longer than other businesses during the initial wave of coronavirus. So future economic shocks shouldn’t be that big a deal for HD.
Just as importantly, Murphy’s Law doesn’t care about economic pressures. If your pipe is about to break, it’s going to break. So home Depot’s relevance in the repair and renovation segment of the industry should stay intact. This inelastic demand profile makes HD one of the stocks to buy for volatility.
Kroger (KR)
Again, grocery stores like Kroger (NYSE:KR) don’t exactly light up the radar when it comes to exciting market ideas. However, if you’re seeking stocks to buy for volatility, Kroger enjoys an incredibly cynical catalyst. Basically, everyone needs to eat!
Kroger benefits because it’s in one of the last segments to suffer from the trade-down effect. This concept refers to the tendency for consumers to seek cheaper alternatives to goods or services until they reach a happy medium. For example, during a booming economy people may eat out more at fancy restaurants. And when things go awry, they may trade down to fast-food joints. Kroger sits in the lower echelon here. Consumers can trade down from Kroger but below that would be dollar discount stores: not exactly a healthy choice.
Iron Mountain (IRM)
Speaking of iron-clad stocks to buy for volatility, we need to have a discussion about Iron Mountain (NYSE:IRM). An enterprise information management service firm, Iron Mountain has worked with some of the world’s top institutions. And a recent spike in cyber threats necessitates information security solutions. That’s where Iron Mountain comes in.
Companies with work-from-home solutions benefitted from sustained productivity during the Covid-19 lockdowns. Unfortunately, this transition came at a cost. According to Alliance Virtual Offices, working from home increased cyberattack frequency by 238%. At this rate, it’s almost certain that many enterprises will succumb to data breaches, making Iron Mountain that much more relevant.
Iron Mountain also specializes in physical document storage and protection. As enterprises get jittery and focus on protecting on what they’ve gained, IRM might rise in relevance.
Kinder Morgan (KMI)
On paper, the pivot toward electric vehicles seemingly makes Kinder Morgan (NYSE:KMI) irrelevant. They're one of the largest energy infrastructure companies in North America, specializing in owning and controlling oil and gas pipelines and terminals.
And with EV sales poised to hit an all-time high this year, KMI appears to be flirting with irrelevancy.
But KMI is still a good stock to buy mainly because analysts may be overstating the speed of EV adoption. Set aside the mantra that EVs are the future for a moment. A few months ago, Bloomberg reported that California issued a rare warning of a power shortfall amid an intense heatwave. So, let’s just get this straight here. The Golden State – which represents the economic engine of the U.S. – can’t handle an influx of air conditioners but it can handle all combustion cars transitioning to EVs? Give me a break. No, we need to wake up to reality and recognize that hydrocarbons may be relevant for decades to come. Therefore KMI still ranks as a stock to buy for volatility.
Originally published on InvestorPlace.com
On the date of publication, Josh Enomoto did not have (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.
