21 Mar 5 Stocks to Consider During Turbulent Times
It’s been an uncertain start to 2022 as the world grapples with a multitude of issues.
Inflation has reared its ugly head, with the US reporting its highest inflation in four decades at 7.9% in February while Singapore sees January’s core prices rising at a decade-high of 2.4%.
The US Federal Reserve has just hiked interest rates for the first time since 2018 and signalled that it plans to continue increasing rates at all six remaining meetings this year.
The prospect of higher rates has dampened demand for growth stocks, resulting in a bear market for the NASDAQ Composite Index.
And as I write this, the Russia-Ukraine war is entering its fourth week in what will go down in history as the biggest unrest in Europe since World War II.
Turbulent times may have arrived, but investors who park their money in strong, stable stocks need not worry.
Here are five stocks that should prove resilient in the face of uncertainty.
China Mengniu Dairy (SEHK: 2319)
China Mengniu Dairy is a Chinese manufacturer of dairy products, cheese and ice cream.
The company has an annual dairy production capacity of 9.9 million tonnes at end-2020 and is in the top 500 list of most valuable brands in the world.
For the first half of fiscal 2021 (1H2021), revenue increased by 22.3% year on year to RMB 45.9 billion.
Net profit more than doubled year on year to RMB 2.9 billion.
China Mengniu’s liquid milk products division, which makes up 85% of total revenue, registered a rise in revenue from RMB 32.6 billion in 1H2020 to RMB 39.4 billion in 1H2021.
Segment profit quadrupled year on year to RMB 2.4 billion.
With milk and dairy products being necessities, the company is unlikely to see a fall in demand, making it a solid stock to own to tide over the volatility.
Starbucks (NASDAQ: SBUX)
Starbucks is a coffee chain that has grown over the years and the company now has more than 34,000 stores worldwide.
The coffee giant has bounced back strongly after its stores were temporarily shut during the pandemic.
For its fiscal 2021 (FY2021) ended 30 September 2021, net revenue climbed by 23.6% year on year to US$29.1 billion.
Operating profit more than tripled year on year to US$4.9 billion as the company saw other operating expenses and impairments fall.
Net profit stood at US$4.2 billion for FY2021, and Starbucks also declared cash dividends of US$2.29 per share, up sharply from the US$1.23 paid out in FY2020.
The momentum has carried forward to the first quarter of 2022 (1Q2022) as revenue jumped by 19% year on year to US$8.1 billion and Starbucks Rewards membership in the US grew 21% year on year to 26.4 million.
Riverstone Holdings Limited (SGX: AP4)
Riverstone is a manufacturer of nitrile and natural rubber gloves that are used in the healthcare and semiconductor industries.
The group has six manufacturing facilities with an annual production capacity of 10.5 billion gloves as of 31 December 2021.
For FY2021, revenue jumped by 68.5% year on year to RM 3.1 billion while net profit more than doubled year on year to RM 1.4 billion.
CEO Wong Teek Son is confident that the group’s cleanroom segment will provide resilience even as demand wanes for healthcare gloves as vaccination rates rise around the world.
Boustead Singapore Limited (SGX: F9D)
Boustead Singapore Limited, or BSL, is an engineering conglomerate with four divisions — energy-related engineering, real estate solutions, geo-spatial, and healthcare.
Revenue for the first half of fiscal 2022 (ended 30 September 2021) rose 17% year on year to S$340.3 million.
However, net profit after adjustments for one-off items declined by 24% year on year to S$19 million.
Despite this, management declared an interim dividend of S$0.015, 50% higher than the S$0.01 that was paid out a year ago.
BSL’s order backlog stood at S$342 million as of 30 September 2021, with its geospatial division maintaining a healthy deferred services backlog of S$116 million.
PepsiCo (NASDAQ: PEP)
PepsiCo is a food and beverage giant that sells its products to more than 200 countries around the world.
The company boasts famous brands such as Lays, Gatorade, Pepsi-Cola, Mountain Dew, and Doritos.
For its FY2021 earnings, PepsiCo reported a 12.9% year on year rise in revenue to US$79.5 billion while operating profit rose 10.7% year on year to US$11.2 billion.
Net profit increased by 7% year on year to US$7.6 billion.
In line with the strong results, the company has raised its quarterly dividend to US$1.075 per share, making this the 49th consecutive year that PepsiCo is raising its dividend.
Disclaimer: Royston Yang owns shares of Starbucks and Boustead Singapore Limited.