Worried about the global recession? If you’re thinking of buying shares then the threat of significant turbulence on financial markets over the next few years is something you need to factor into your investment decisions.
You can protect yourself from this massive economic uncertainty by buying some choice safe-haven stocks. And you don’t need to search the ends of the earth to find them. There are a number of sectors that are less cyclical in nature and are thus equipped to weather any severe macroeconomic volatility. Utilities operators, fixed-line and mobile telecoms companies, defence contractors and food and medicine manufacturers are just a few of these more-resilient segments of the share market.
Get away, gold!
Getting exposure to safe-haven precious metals is one grand idea for cautious investors to pursue. A perfect storm is bubbling: severe social, macroeconomic and geopolitical anxiety; a resumption of US dollar weakness; and rising scepticism over the true value of fiat currencies as central banks embark on increasingly-generous monetary policy. No wonder prices of gold and other traditional ‘hard currencies’ are increasing.
But you don’t just have to play the yellow metal to try and make big returns. Why not get exposure to platinum group metals (PGMs) instead? Like their big brother gold, these assets are also enjoying rocketing demand from the investment community. Latest data from UBS in fact shows that the Nymex platinum and palladium books have continued growing. As a consequence, net positions here now sit at their highest for nine weeks and 10 weeks respectively.
You can ride this trend by buying shares in Sylvania Platinum (LSE: SLP). I’d rather buy this share that the metals themselves or metal-backed financial instruments like ETFs. Why? Well at current prices it offers the sort of value that’s too good to miss.
A top buy for the global recession
Firstly, Sylvania offers trades on a rock-bottom forward P/E ratio of around 4 times. It also carries a monster dividend yield north of 10%. Don’t forget that buying PGMs or metal-related investment vehicles doesn’t offer investors the chance to receive dividends, of course.
Okay, those readings might make Sylvania appear too good to be true. Low earnings multiples and gigantic yields inevitably lead to claims of dividend traps. And investors do indeed need to be careful trading with such shares. But this mining stock doesn’t fall into this category, in my opinion.
Its profits outlook is quite brilliant and not just for fiscal 2020. The economic and political fallout of Covid-19 is likely to keep demand for safe-haven assets like precious metals well bought over the next few years at least. Besides, Sylvania has a strong balance sheet to support chunky dividends, illustrated by its decision to buy back more of its shares in recent days. This is one income share I think’s a terrific pick for these times of great economic uncertainty.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.