3 stocks that always go up
These consumer-focused plays resist even ugly downturns.
By Jeff Reeves
OK, that "3 stocks that always go up" headline is overhyped. A more accurate title would be "3 stocks that go up most of the time," but fewer of you would have stopped in to have a look.
Still, hear me out, because these three stocks definitely are worth a look.
My methodology was to examine the crash this spring where the S&P 500 shed 9.3% and the Nasdaq dropped 11.1% over two months, and find stocks that actually went up during that ugly time. Not stocks that popped one day on good news, mind you, but stocks that hung in there -- even on the down days.
Those three stocks were consumer products giant and Arm & Hammer maker Church & Dwight (CHD), discount retailer Dollar Tree (DLTR) and packaged foods giant Dean Foods (DF).
Here's how they stacked up:
Church & Dwight
From April 1 to June 1, the S&P 500 lost ground 26 of 43 trading days -- or 60.4% of the time. The total loss was 9.3% for the index (not counting any dividends, of course, since it's a short period of time).
In that same 43-trading-day period, Church & Dwight was down only 16 sessions -- or just 37% of the time. That's a significant improvement.
What's more, while the major indices lost ground big-time, CHD stock tallied a 7.5% gain.
Good headlines during the period were the declaration of another 24-cent dividend (which was unchanged from the quarter before) and the reaffirmation of 2012 guidance … but these cannot be wholly responsible for the company's stability and outperformance in this tough period for the market.
Broadly speaking, consumer staples are a great safe haven. It makes sense that Arm & Hammer cleaning products and CHD brands like Aim and Pepsodent oral care should see strong sales no matter what the macroeconomic picture is.
The stock has continued to move higher and is sitting on a roughly 26% gain year-to-date vs. just 6% or so for the broader S&P 500 Index as of this writing.
Dollar Tree
A look at Dollar Tree from April 1 to June 1 shows similar strength versus a tough market. It was down just 21 days out of 43 -- 48% of the time, which means it was up more than it was down.
Furthermore, the overall gain in share price was 5.8%. Considering the Nasdaq was down by almost twice that at -11.1%, the move up is pretty significant.
Now, Dollar Tree did see a lurch down in May as its earnings per share guidance came in below expectations. But it bounced back just as quickly, and that actually might help prove the stability in this stock.
This strength during the spring isn't an anomaly, either. Dollar Tree has been on a tear in 2012, up about 25% so far.
Dean Foods
Another staple in American households is Dean Foods, and this stock also proved its stability in a tough spring for the market. It was down just 15 of 43 days -- about 35% of the time.
Its overall performance was 26.8%. Amazing considering that 9.3% loss for the S&P in the same April 1 to June 1 period.
Dean Foods did see a pop as it raised guidance -- the stock added 10% in one session alone on May 9. But clearly there's more to the story than just a single headline.
Year to date in 2012, DF stock is up about 32% -- over five times the performance of the broader S&P index.
Jeff Reeves is the editor of InvestorPlace.com and the author of "The Frugal Investor's Guide to Finding Great Stocks." Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, Jeff Reeves did not own a position in any of the aforementioned securities.
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