Zinger Key Points
- As the economy weakens, investors may return to stocks with strong balance sheets.
- Low level of debt, high dividend yield and strong operating cash flows may be useful screening criteria.
- Get access to your new suite of high-powered trading tools, including real-time stock ratings, insider trades, and government trading signals.
Markets are increasingly concerned about an impending recession following the latest U.S. economic data, which showed a slowing in the pace of growth in the labor market and service sector activity in March as a result of the first negative spillovers arising from elevated interest rates and banking sector difficulties.
Investors' attention may soon shift to strong, low-debt, high-cash-flow stocks with businesses that prosper even during economic downturns.
Benzinga screened 5 recession-proof stocks with the following characteristics:
- Mega-cap (market capitalization more than $200 billion).
- An availability of cash sufficient to pay off all short-term debts.
- A total debt lower than revenue from the previous year.
- A positive dividend yield.
- Net debt is less than EBITDA.
Read More: Job Market Cools, Unemployment Ticks Lower: US Adds 236K Jobs In March, Missing Economist Expectations
5) Johnson & Johnson JNJ
- Funds from operation (FFO) + Cash to short-term debt: 3.5x
- Total debt/revenue (last 12 months): 0.4x
- Net Debt/EBITDA (LTM): 0.5x
- Dividend yield expected (next 12 months): 2.84%
4) Merck & Co, Inc. MRK
- Funds from operation (FFO) + Cash to short-term debt: 14.5x
- Total debt/revenue (last 12 months): 0.5x
- Net Debt/EBITDA (LTM): 0.8x
- Dividend yield expected (next 12 months): 2.66%
3) Pfizer Inc. PFE
- Funds from operation (FFO) + Cash to short-term debt: 14.5x
- Total debt/revenue (last 12 months): 0.4x
- Net Debt/EBITDA (LTM): 0.4x
- Dividend yield expected (next 12 months): 4.02%.
2) Chevron Corporation CVX
- Funds from operation (FFO) + Cash to short-term debt: 22x
- Total debt/revenue (last 12 months): 0.1x
- Net Debt/EBITDA (LTM): 0.1x
- Dividend yield expected (next 12 months): 3.59%
1) Exxon Mobil Corp XOM
- Funds from operation (FFO) + Cash to short-term debt: 49.1x
- Total debt/revenue (last 12 months): 0.1x
- Net Debt/EBITDA (LTM): 0.2x
- Dividend yield expected (next 12 months): 3.2%
Read Also: These 5 High-Growth Small-Cap Stocks Surged More Than 100% In Q1: What's Next?
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