The FTSE 100 has slid this week. One factor hurting stocks is rising bond yields, as investors are expecting interest rates to stay higher for longer. Even though I’m not in panic mode thinking of a stock market crash, it’s good to have everything in order, just in case. Therefore, here are the stocks I’d like to buy if I start to get worried about the future.
Don’t turn out the lights
I’d definitely start by looking to utility companies. I don’t mind too much if this is water, gas or electric. The main premise is that demand by businesses or residential customers should remain constant, regardless of what happens in the economy.
We all need these basic utilities, which leads me to conclude that the related stocks shouldn’t experience a large fall in value, even if times get tough.
For example, I’d buy National Grid which ticks the above box. An added benefit is that the company is diversified, having operations in America as well.
A point worth noting is that even utility companies can end up in a pickle. We saw this earlier in the year with the mountain of debt Thames Water had, amounting to 80% of the value of the business.
Food staples to the rescue
Another area of focus would be food producers. In this respect, I’m referring to Associated British Foods and Bakkavor Group. These are two of the biggest publicly-listed names I’d buy.
Most of the brands that operate under the umbrella of these two stocks are household names. This includes everything from tea bags to bread. Ultimately, we aren’t talking about luxury items. So even if consumers feel a pinch financially, these aren’t the type of goods they’ll cut back on.
As a result, I believe these shares will be able to ride out any wobble the stock market might have. These are two stocks I have on my watchlist and would look to buy if I started to get worried about my overall portfolio.
However, it’s true that in the long term, the share price performance is unlikely to match that of growth stocks. For example, over the past year, the Bakkavor share price is flat.
A helping hand from the professionals
Finally, I’d buy some investment management stocks such as Pershing Square Holdings. This might seem a little unconventional, but my thinking is that any period of uncertainty will present opportunities in the market.
Professional money mangers (such as those that run Pershing Square) are best placed to take advantage of such movements. Therefore, the share price of such operations could hold firm because of smart stock picks during a downturn.
Granted, the existing holdings could take a hit in the process. Depending on what stocks the funds already own, my idea could backfire if the portfolio underperforms massively.
