Diversification is the edge for any portfolio. Rising inflation is impacting discretionary consumer spending. These stocks tend to be good recession hedges by either thriving in a recessionary period or are essential products needed regardless of the economic landscape. The following four companies are firing on all cylinders and are leaders in their respective industries weathering inflationary headwinds.
Nvidia (NASDAQ: NVDA) is the world’s leading graphic processor unit (GPU) maker. Their chips are primarily used for gaming and data center applications. They make high end GPUs that are used in high-end gaming PCs as well as cryptocurrency mining rigs. Their chips are also used in data centers and artificial intelligence (AI) applications. The Company recently cut their revenue forecast dramatically for Q2 2022 revenues to come in near $6.7 billion from the prior guidance of $7.94 billion to $8.26 billion. Weakened consumer sentiment is impacting the gaming segment while supply chain disruptions are impacting the data center business. This is a boon for patient investors that have been waiting to enter at lower prices. Shares are down (-37%) for 2022. The $140.55 swing low and/or $192.74 breakout are entries levels to consider.
Costco: Warehouse Clubs/Consumer
Costco (NASDAQ: COST) is the world’s largest warehouse membership club. While retailers like Target (NYSE: TGT) and Walmart (NYSE: WMT) are cutting guidance amid weakening consumer spending, Costco is firing on all cylinders. Stockpiling helped Costco during the pandemic, and it may help again in a recession as consumers try to stretch their wallets. They just reported July comparable sales up $10.8% to $16.85 billion despite having one less shopping day than last year. E-commerce comparable sales rose 10.2%. This stock also comes with a $0.63% dividend yield. Shares are down (-5%) for 2022. The $406.51 swing low and/or the $491.13 breakout are entry levels to consider.
Abbott: Lifecycle Medical/Health Care
Abbott (NYSE: ABT) is a global medical technology company with that provides healthcare products for every stage of life from infant formula to testing and treating the fastest growing chronic diseases. They have over 113,000 employees in over 160 countries for over 130 years. Their portfolio of over 1,200 products encompass medical devices, diagnostics, nutrition, and branded generic medicines. This enables them to be a trusted and preferred one-stop shop for patients throughout their lives. A pulmonary patient may get a XIENCE Sierra coronary stent or a St. John’s Medical pacemaker, both are Abbott owned. Their FreeStyle Libre blood glucose monitor requires no more finger sticks (pricking a finger for blood). Their Ensure, Pedialyte and Similac nutrition products can be found in almost every grocery store. They continue to grow as revenues rose 10.1% to $11.26 billion in Q2 2022 as they raised their full-year 2022 EPS to come in around $4.90 versus $4.86 consensus analyst estimates. Abbott is a dividend aristocrat with a $1.67% dividend yield. Shares are down (-19%) for 2022. The $101.24 swing low and/or the $111.148 breakout are entry levels to consider.
Pure Storage: Data Warehousing/Data Storage
Pure Storage (NASDAQ: PSTG) is the world’s most advanced data storage solutions provider. As the world continues to churn out oceans of data, it has to be consumed, stored, and managed. Regardless of the economic climate, data will also be a constant. Pure Storage provides a portfolio of enterprise storage solutions including storage-as-a-service (SaaS) across multiple clouds through a subscription model and delivering hybrid cloud architecture for apps. They continues to gain market share in the enterprise storage market. Their fiscal Q1 2023 earnings beat estimates by $0.20 per share while revenues grew 50% YoY beating analyst estimates by nearly $100 million coming in at $620.41 million versus $521.981 million. They raised full-year fiscal 2023 revenues to come in at $2.66 billion beating analyst estimates for $2.59 billion. Shares are down (-5%) for the year. The $21.90 swing low and/or $26.10 breakout are entry levels to consider.
Each chart has two horizontal green lines for potential entry levels. The bottom green line is the recent swing low price, and the top green line is the reversal breakout level. Entries can be taken at both levels when prices test them.
The monthly stochastic is a momentum indicator. An indicator-based entry system can be used by taking a position when the stochastic oscillator crosses back up (IE: blue line crosses up through the red line).