Flurries of frightful economic news continue to drift in and point to a painful global recession. Some of the financial titbits to spook share investors in recent sessions include more than 35m Americans out of work, and Fed lawmakers predicting a 25% US unemployment rate by the end of the year.
Stringent Covid-19-related lockdown measures have taken a huge bite out of corporate earnings. But the economic implications of the coronavirus aren’t the only threats to global growth. US-Sino trade wars, Brexit, and China’s debt crisis are just a few reasons to expect an extreme recession and a slow road to recovery.
As I say, economic data from all four corners of the world continues to confound expectations in a negative way. So it will probably pay to be prepared for an even more painful downturn than brokers currently predict. This is no reason for stock investors to stop doing what they do, though. It’s important to remember that successful share investing is a long-term endeavour and that volatility is part-and-parcel of this.
A hedge against a global recession
Those who are worried about tough macroeconomic and geopolitical issues might want to buy into gold stocks, though. The yellow metal has just surged to fresh seven-year peaks above $1,750 per ounce on renewed safe-haven buying.
One great precious metals share to buy today is Polymetal International. It’s dirt cheap, for starters, as it carries a forward price-to-earnings (P/E) ratio of 12 times and a bulky 5% corresponding dividend yield.
The FTSE 100 digger’s share price has rocketed 30% over the past three months thanks to renewed gold buying. The bright outlook for bullion values, allied with the strong progress it is making on the production front encourages me to believe that Polymetal can keep growing in value, too.
Another Footsie star
Reckitt Benckiser Group (LSE: RB) is another rock-solid Footsie pick for these troubled times.
I recently explained why Unilever’s broad range of market-leading products should keep profits there on the up-and-up regardless of this economic downturn. It’s a quality that it clearly shares with Reckitt Benckiser thanks to the latter’s beloved brands like Sweetex sweeteners, Scholl footcare products, and Nurofen painkillers.
In fact, the household goods maker has multiple layers that makes it such a terrific defensive pick. It produces a wide range of products across the health and home categories, protecting it from falling demand in one or two segments. Many of its products like bleach, painkillers, disinfectant, and indigestion relievers are essential goods we simply can’t do without. And Reckitt Benckiser’s geographical footprint is large, taking the sting out of particularly tough conditions in certain territories.
This FTSE 100 share’s more expensive than Polymetal. It currently trades on a forward P/E ratio of 24 times. Still, Reckitt Benckiser’s secure profits outlook makes it worthy of a meaty premium in my opinion. I’d happily buy both companies in an ISA today.
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Royston Wild owns shares of Unilever. The Motley Fool UK owns shares of and has recommended Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.