Back From The Brink
A year after the financial-industry meltdown was on the verge of becoming Great Depression 2.0, a new Associated Press poll finds that 70% of Americans feel that the financial industry still is too unregulated to prevent another such occurrence. In this week of the first anniversary of the Lehman Brothers bankruptcy, nearly 80% of the respondents say that risky lending practices were largely responsible for the recession.
As the recession picked up steam last year, articles began to appear recommending "recession-proof" stocks. Let's revisit these predictions now that we have about a year's worth of outcome.
On September 8th of last year, Ryan Goldberg, one of many Minyanville Media "professors," gave us seven such companies. Here are the results for 9/15/08 through 9/14/09 AM: Urban Outfitters (-18%); McDonald's (-15.7%); Fortune Brands (-32.43%); Rent-A-Center (-19.04%); Wal-Mart (-19.37%); Ace Cash Express (-30.71%). The seventh company, Purina, is privately held.
Last September 29th, the renowned Motley Fool queried their supercomputer for five stocks "that look like they could do well in any extended downturn." Three of these have turned in disasterous outcomes: Torm A/S (ADR) (-64.33%); Agria (-51.47%); Hornbeck Offshore Svcs (-35.69%). Nationwide Health Properties is disappointing at -13.25%. Fomento Economico Mexicano is pretty much of a wash at -1.45%.
In early August '08, Jim Kramer went out on a limb with recession-proof stocks that "will become the most treasured." His blue-chip approach also came up short. Results range from Heinz (-24.33%) and Procter & Gamble (-24.48%) to Colgate-Palmolive (-6.21%), Unilever (-5.99%), and Coca-Cola (-4.39%). His other picks were General Mills (-12.52%) and Pepsico (-19.71%).
What about stocks that actually have done well? How about Alpha Pro Tech (+371.23%)? Or Valassis Communications (think Sunday newspaper coupon inserts) (+85.29%)? Or Sinovac Biotech (+213.74%)? Did they do well because of the recession? Would they have done even better if the recession hadn't occurred? Or was the recession even a factor?
A far-from-comprehensive list of other twelve-month gainers: Kirkland's (+397.78); Cott (+361.22); Spectrum Pharmaceuticals (+382.58); Dollar Thrifty Auto (+303.61); Stec (343.76); China Green Agriculture (+276.36); Fuqi Intl. (+225.27); Green Mountain Coffee Roasters (+201.76).
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