Bloomberg now expects 2023 to be one of the worst years for the world economy since 1993. But don’t panic — here are 3 stocks to help protect you from the pain
Bloomberg now expects 2023 to be one of the worst years for the world economy since 1993. But don’t panic — here are 3 stocks to help protect you from the pain
The world economy has largely bounced back from the COVID-19 pandemic, but dark times could lie ahead according to Bloomberg.
Economist Scott Johnson at Bloomberg Economics forecasts that the world economy will grow 2.4% in 2023, marking a slowdown from the 3.2% growth expected for this year. 2.4% would be the slowest growth since 1993 — except for the crisis years of 2009 and 2020.
His analysis also shows the U.S. economy entering a recession at the end of 2023. For the euro area, a recession is expected at the start of the year.
“In the US, with wage gains set to keep inflation above target, we think the Fed is headed toward a terminal rate of 5%, and will stay there till 1Q24,” Johnson writes. “In the euro area, meanwhile, a more rapid decline in inflation will mean a lower terminal rate and the possibility of cuts at the end of 2023.”
The prospect of a recession does not bode well for stocks. U.S. GDP demonstrated growth in Q3 and the S&P 500 is still down 19% year-to-date.
Of course, some businesses are more resilient than others. Here’s a look at three companies capable of making money through thick and thin. Wall Street also sees significant upside in this trio.
Don’t miss
Southern Co
Southern (NYSE:SO) is a gas and electric utility holding company headquartered in Atlanta. It serves about nine million customers.
The utility sector is known for being a defensive play. No matter how many times the Fed raises interest rates — and how bad next year turns out to be — people still need to heat their homes in the winter and turn the lights on at night.
The recession-proof nature of the business also means Southern can pay reliable dividends.
In April, the company boosted its quarterly payout by 2 cents per share to 68 cents per share, marking the 21st consecutive year that Southern has increased its dividend.
Look further back, and you’ll see that the company has paid steady or increasing dividends since 1948.
In the first nine months of 2022, Southern earned an adjusted profit of $3.35 per share, up 9.8% from the same period last year.
Last Wednesday, Wells Fargo analyst Neil Kalton raised his price target on Southern from $70 to $77. While he kept an Equal Weight rating on the shares, the new price target implies a potential upside of 11%.
Kroger
The economy moves in cycles, but people always need to shop for food. As a result, Kroger (NYSE:KR) can make money through our economy’s ups and downs.
That’s one of the reasons why in an era where physical stores are under serious threat from online merchants, Kroger remains a brick-and-mortar beast.
The company has expanded its online presence, too. Kroger’s digital sales in 2021 clocked in 113% higher compared to two years ago.
You can see Kroger’s resilience in its dividend history: the company has increased its payout to shareholders for 16 consecutive years.
Evercore ISI analyst Michael Montani recently upgraded Kroger from ‘in line’ to ‘outperform’ with a price target of $56 — implying a potential upside of 26% from where the stock sits today.
Coca-Cola
Let’s round out the list with Coca-Cola (NYSE:KO) — a classic example of a recession-resistant business. Whether the economy is booming or struggling, a can of Coke is affordable for most people.
The company’s entrenched market position, massive scale, and portfolio of iconic brands — including names like Sprite, Fresca, Dasani and Smartwater — give it plenty of pricing power.
Add solid geographic diversification — its products are sold in more than 200 countries and territories around the globe — and it’s clear that Coca-Cola can thrive under all circumstances. After all, the company went public more than 100 years ago.
More impressively, Coca-Cola has increased its dividend for 60 consecutive years. The stock currently yields 2.8%.
UBS analyst Peter Grom has a ‘buy’ rating on Coca-Cola and a price target of $68 — roughly 9% above where the stock sits today.
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OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
VICTORIA – British Columbia is forecasting a record budget deficit and a rising debt of almost $129 billion less than two weeks before the start of a provincial election campaign where economic stability and future progress are expected to be major issues.
Finance Minister Katrine Conroy, who has announced her retirement and will not seek re-election in the Oct. 19 vote, said Tuesday her final budget update as minister predicts a deficit of $8.9 billion, up $1.1 billion from a forecast she made earlier this year.
Conroy said she acknowledges “challenges” facing B.C., including three consecutive deficit budgets, but expected improved economic growth where the province will start to “turn a corner.”
The $8.9 billion deficit forecast for 2024-2025 is followed by annual deficit projections of $6.7 billion and $6.1 billion in 2026-2027, Conroy said at a news conference outlining the government’s first quarterly financial update.
Conroy said lower corporate income tax and natural resource revenues and the increased cost of fighting wildfires have had some of the largest impacts on the budget.
“I want to acknowledge the economic uncertainties,” she said. “While global inflation is showing signs of easing and we’ve seen cuts to the Bank of Canada interest rates, we know that the challenges are not over.”
Conroy said wildfire response costs are expected to total $886 million this year, more than $650 million higher than originally forecast.
Corporate income tax revenue is forecast to be $638 million lower as a result of federal government updates and natural resource revenues are down $299 million due to lower prices for natural gas, lumber and electricity, she said.
Debt-servicing costs are also forecast to be $344 million higher due to the larger debt balance, the current interest rate and accelerated borrowing to ensure services and capital projects are maintained through the province’s election period, said Conroy.
B.C.’s economic growth is expected to strengthen over the next three years, but the timing of a return to a balanced budget will fall to another minister, said Conroy, who was addressing what likely would be her last news conference as Minister of Finance.
The election is expected to be called on Sept. 21, with the vote set for Oct. 19.
“While we are a strong province, people are facing challenges,” she said. “We have never shied away from taking those challenges head on, because we want to keep British Columbians secure and help them build good lives now and for the long term. With the investments we’re making and the actions we’re taking to support people and build a stronger economy, we’ve started to turn a corner.”
Premier David Eby said before the fiscal forecast was released Tuesday that the New Democrat government remains committed to providing services and supports for people in British Columbia and cuts are not on his agenda.
Eby said people have been hurt by high interest costs and the province is facing budget pressures connected to low resource prices, high wildfire costs and struggling global economies.
The premier said that now is not the time to reduce supports and services for people.
Last month’s year-end report for the 2023-2024 budget saw the province post a budget deficit of $5.035 billion, down from the previous forecast of $5.9 billion.
Eby said he expects government financial priorities to become a major issue during the upcoming election, with the NDP pledging to continue to fund services and the B.C. Conservatives looking to make cuts.
This report by The Canadian Press was first published Sept. 10, 2024.
Note to readers: This is a corrected story. A previous version said the debt would be going up to more than $129 billion. In fact, it will be almost $129 billion.
NANAIMO, B.C. – Former Bank of Canada governor Mark Carney says he’ll be advising the Liberal party to flip some the challenges posed by an increasingly divided and dangerous world into an economic opportunity for Canada.
But he won’t say what his specific advice will be on economic issues that are politically divisive in Canada, like the carbon tax.
He presented his vision for the Liberals’ economic policy at the party’s caucus retreat in Nanaimo, B.C. today, after he agreed to help the party prepare for the next election as chair of a Liberal task force on economic growth.
Carney has been touted as a possible leadership contender to replace Justin Trudeau, who has said he has tried to coax Carney into politics for years.
Carney says if the prime minister asks him to do something he will do it to the best of his ability, but won’t elaborate on whether the new adviser role could lead to him adding his name to a ballot in the next election.
Finance Minister Chrystia Freeland says she has been taking advice from Carney for years, and that his new position won’t infringe on her role.
This report by The Canadian Press was first published Sept. 10, 2024.
