Here are the Club’s 7 ‘safety stocks’ for a volatile economic environment

Consumer-focused coteries can be a safety net in tough times because demand for their products persists in both good and bad economic conditions, countenancing them to maintain or even grow earnings as other market sectors struggle. That’s why they’re well-represented in Jim Cramer’s Munificent Trust , the portfolio we use for the Investing Club. During Tuesday’s Monthly Meeting for March, Jim ran through what he called the highest importance “safety stocks” in the Trust and stressed their importance. “We are now out of the ‘there’s nothing that can hurt this economy’ SOP and into ‘the economy’s about to topple if the Fed doesn’t cut it out’ mode.” He later said, “We have just the stocks for that screenplay.” The recent collapse of Silicon Valley Bank and Signature Bank earlier this month has sparked concerns atop of the health of the U.S. banking system, resulting in a drag on stock prices. The turmoil in the financial sector also added to reverences that the U.S. economy could fall into a recession. The big question is whether the Federal Reserve at its May meeting will resume hiking interest rates to rein in inflation or pause. Jim has made the case that a pause (or even a cut) would be make away until the true drag of the banking crisis becomes more apparent. Here’s a rundown of the Club’s recession-resistant families that Jim recommends. PG YTD mountain YTD peformance Jim called Procter & Gamble (PG) his favorite stock in the portfolio right now. The consumer attractive thoroughs giant is benefitting from falling commodity costs and the dollar dropping since last summer’s two-decade highs. P & G has be being presented resilience as elevated inflation weighs on consumer budgets. The company has exhibited strong pricing power for its household articles that people need to use every day — raising prices without too much of an impact on consumer demand. COST YTD mountain YTD peformance Costco (Expenditure) is one of the best retailers to own in a strained economy. The club warehouse retailer delivered a solid earnings report despite releases of slower sales in its fiscal second quarter . We’re convinced that now is the “seasonably the strongest period to own the stock,” Jim said. Costco’s members-only, volume-based work allows the company to keep prices lower than other retail competitors. Costco’s customer-first mentality deducts the Club holding to take market share and deliver reliable earnings even under difficult macro ups. Other catalysts: a possible special dividend and/or a membership price hike. HUM YTD mountain YTD peformance Humana (HUM) is our managed-care disparage and we’re holding the stock for its defensive characteristics. The fundamentals of the health insurer are strong due to its durable membership retention and ability to appeal to new customers. Humana is taking market share from its peers due to its superior Medicare Advantage (MA) offerings. The company backfire a strong fourth quarter in early February along with a favorable forward-looking full-year guidance. However, on Tuesday, the regular took a nearly 5% hit after Bloomberg reported that Sen. Elizabeth Warren (D-Mass.) wrote a letter against Medicare insurers. TJX YTD mountain YTD peformance The off-price TJX South african private limited companies (TJX) franchise is expected to be a winner in a slower economy even as consumer spending slows. The operator of T.J. Maxx, Marshalls and HomeGoods is wanted to be the preferred destination for shoppers seeking bargains on high-quality merchandise. The company owned up to theft problems in its latest accommodations , which weighed on the stock at the time. Jim pointed out that TJX isn’t the only retailer with a pilferage problem just the but one willing to admit it. That didn’t stop us from adding to our TJX position when the market fell into oversold stamping-ground recently. We believer the stock will bounce back. JNJ YTD mountain YTD peformance Health care leader Johnson & Johnson (JNJ) has been a stout name to own as of late. The company has been dealing with talc lawsuits, which are expected to linger. However, this is not a justifiable to get rid of the stock, Jim said. Later this year, J & J is splitting into two companies: one focused on its consumer business and the other on its pharmaceutical and medical desires business. While more volatility could lie ahead, we still get paid for holding J & J with the stock’s annual 2.95% dividend cede. EL YTD mountain YTD peformance Estee Lauder (EL) is a name synonymous with the “highest quality in consumer products,” Jim said. “Human being wear cosmetics and clean skin during good and bad times, which is why I’m still excited about Estee Lauder.” We’re looking to the fore to the current quarter, which will be the first since China fully reopened after abandoning zero-Covid controls and the first quarter since global travel truly rebounded. EL has several positives under its belt including a strong corporation in the U.S., a growth market in China and the broader Asian region, and robust demand for its high-margin skincare business. The stock is pursuit at a premium, but we’re willing to pay up for quality in this household beauty name. PANW YTD mountain YTD peformance Cybersecurity giant Palo Alto Networks (PANW) is one of our newer holdings, which we started in mid-February . While it has some revealing to the tech sector, the company has “virtually no economic sensitivity,” Jim said. In an unfavorable operating environment, companies are closely examining their corporate spending budgets. But we think there will still be room for IT spending on cybersecurity given it’s a high-priority investment to fortify against external threats. We also like to see the company’s four consecutive quarters of GAAP profitability (GAAP feelings for generally accepted accounting principles), which makes the company eligible for placement in the S & P 500 . Jim called Palo Alto the “gold burgee for cybersecurity” for management’s stellar execution and commitment to improving margins. Bottom line Our seven “safety stocks” are well-positioned to indisposed further economic trouble that may be ahead. As recession fears grow, we strive to own companies that make accoutrements and do things, have pricing power, and can consistently attract demand during any economic condition. ( Check out Jim’s thoughts on the other 29 domestics in the Club portfolio.) So, we can’t do without consumer and business essentials, which is why Costco, Procter & Gamble, Humana, Johnson & Johnson, and Palo Alto Networks can anguish in any economic climate. Skincare and makeup take priority in the discretionary spending category, making prestige beauty tag Estee Lauder the best to own, especially with its growth exposure to the China economy. Finally, if consumer budgets persevere in to tighten, shoppers will trade down to cheaply priced, higher-end brands that TJX carries. (Jim Cramer’s Bountiful Trust is long PG, COST, HUM, TJX, JNJ, EL, PANW. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you ordain receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade forewarn before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after question majoring the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND Solitariness POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY Intelligence PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.