The stock market picked up today after the US and China agreed to resume trade talks next month. The DJIA jumped over 400 points and the S&P 500 gained 1.4% after the news hit. Hu Xijin, the editor-in-chief of the Global Times, a tabloid under the official newspaper of the Communist Party of China, tweeted that there is more of a possibility for a major breakthrough this time around for the US and China. Hu is followed by many Wall Street analysts and his tweet brought further hope for a trade deal. The days leading to the latest agreement to resume trade talks have been discouraging for investors.
Earlier this week, the manufacturing sector showed signs of contraction as the ISM U.S. Manufacturing Purchasing Managers’ Index fell to 49.1% in August, the lowest reading in more than three years. The data leaves the Fed in a tight spot for its upcoming September meeting. The CME CME watch tool is estimating a more than 95% chance that the Fed will cut 25 basis points in September and a 4.2% chance that they don’t cut at all.
Despite discouraging economic data, consumers still seem to be spending. Personal spending went up 0.6% in July despite a tepid increase of 0.1% in personal income. In Q2, personal consumption rose 4.7% implying that the consumer is disregarding the tariff battle going on between the world’s largest economies. The Atlanta Fed is tracking third quarter GDP at 2.3% following a 2% gain in Q2. Let’s take a look at what stocks can help fortify your investment portfolio if market volatility returns.
Planet FitnessPLNT is a stock that is coming off solid top and bottom-line beats, growing 29.3% and 32.4% year-over-year, respectively. The company’s top-line surge was driven by an increase in the franchise, corporate-owned stores and equipment revenues. Shares have soared 25.2% year-to-date, outpacing the broader leisure services market. The company’s low membership rates make it resilient to a recession as members will likely not cancel. Planet Fitness has very little exposure to China, which also bodes well for the company to continue its successful run.
Dollar GeneralDG is an additional company that offers products at discounted levels, something that can be beneficial when bond yield curves indicate that a recession is on the horizon. Dollar General has been one of the best performing discount retail stocks, surging 46% YTD. The company had a solid Q2 where their top and bottom-lines continued to grow Y/Y and same store sales also continued to climb; same store growth was primarily driven by a jump in average transaction amount and customer traffic. The company has expanded their presence across the US, putting them in an advantageous position to benefit from their discounted products if a recession strikes.
The Home DepotHD is a company that typically performs well in low rate environments. When interest rates are low, people take advantage by refinancing their mortgages and use the income saved from lower monthly mortgage payments to invest in home improvement projects. With most analysts expecting a second cut from the Fed in September, companies like Home Depot are poised to succeed. Home Depot also boasts a dividend yield of 2.43%, which further provides stability for their shareholders. Their healthy balance sheet and dividend make them a company that can be a safe haven when tariffs and plummeting bond yields continue to be headwinds for the economy.
Agree Realty CorporationADC is a real estate investment trust that focuses on developing, acquiring, and operating properties that are leased to major national and regional retail companies. Some of the major retail companies they lease to are McDonalds MCD, Walmart WMT, and Burlington BURL. Over its 23-year history, the company has developed over 40 community shopping centers primarily throughout the Midwestern and Southeast United States.
In general, REIT’s also perform well in low rate environments, as they can refinance their debts and use the spare cash to invest in more properties. REIT’s are federally obligated to pay out 90% of their earnings each year to maintain their tax-free privileges, resulting in steady and solid dividend payouts. Agree Realty boasts a dividend yield of 3% and has soared 27.1% YTD, outpacing the broader real estate market.
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In addition to the companies you read about above, today you get details on the newly-legalized
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Zacks special report revealing how investors can profit from this new opportunity. As more states legalize this activity, the industry could expand by as much as 15X. Zacks’ has just released a Special Report revealing 5 top stocks to watch in this space.
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The Home Depot, Inc. (HD) : Free Stock Analysis Report
Planet Fitness, Inc. (PLNT) : Free Stock Analysis Report
Dollar General Corporation (DG) : Free Stock Analysis Report
Burlington Stores, Inc. (BURL) : Free Stock Analysis Report
Walmart Inc. (WMT) : Free Stock Analysis Report
McDonald's Corporation (MCD) : Free Stock Analysis Report
Agree Realty Corporation (ADC) : Free Stock Analysis Report
CME Group Inc. (CME) : Free Stock Analysis Report
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