Yahoo Finance Wall Street Braces for Debt-Ceiling Crisis: 3 Safe Picks
The dilemma over increasing the U.S. debt ceiling at the moment is creating panic among investors. President Joe Biden recently said that the Republicans’ latest proposal on lifting the debt ceiling is “quite frankly, unacceptable.”
House Speaker Kevin McCarthy alleged that White House officials are backpedaling in discussions over raising the debt ceiling during the weekend. In reality, GOP negotiators halted the continuing talks over pushing up the debt ceiling, raising uncertainties about an arrangement being reached shortly.
However, the Jun 1 deadline is coming up, and the U.S. Government may run out of money to pay for its expenses unless Congress gives the go-ahead to borrow further.
Now, if the Government is not in a position to pay for its debts, there would be pandemonium across global economies. The Government won’t be able to finance any of its operations and provide funds for national defense, medical, and various other social security prerogatives.
Credit rating agencies invariably would downgrade the economy, borrowing costs would surge, and consumer sentiment could take a beating, eventually tipping the economy into a recession. Millions of people may lose their jobs, and such worries may compel investors to sell U.S. treasury bonds, leading to a weaker dollar and a lot of gyration in the stock market.
Thus, raising the debt ceiling has now become imperative, and approval from both chambers of Congress is the need of the hour. But since negotiations to increase the debt ceiling paused in Washington, Wall Street should undeniably brace for volatility. This calls for placing bets on risk-adjusted stocks that remain unperturbed by market instability.
These stocks flaunt a low beta (ranges from 0 to 1) that helps them counter market vagaries. They also provide dividends, indicating a sound business model. At the same time, these stocks are non-cyclical in nature. In other words, these are defensive stocks that exist in the utilities and consumer staples sectors. Demand for their products and services like electricity, gas, water, and food remains unaltered during recession-induced market mayhem.
We have, thus, selected three stocks from the aforesaid areas that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
NiSource NI is an energy holding company and, together with its subsidiaries, provides natural gas, electricity, and other products and services in the United States. NiSource, currently, has a Zacks Rank #2 and a VGM Score of B.
NI has a beta of 0.47 and a dividend yield of 3.7%. The company’s expected earnings growth rate for the current year is 6.8%. The company’s estimated earnings growth for the next five-year period is 6.9%.
NewJersey Resources NJR is an energy services holding company that, through its subsidiaries, provides safe and reliable natural gas and clean energy , asset management, and home services. NewJersey Resources, at present, has a Zacks Rank #2 and a VGM Score of B.
NJR has a beta of 0.65 and a dividend yield of 3.2%. The company’s expected earnings growth rate for the current year is 5.6%. The company’s estimated earnings growth for the next five-year period is 6%.
Campbell Soup CPB is a worldwide manufacturer and marketer of high-quality, branded convenience food products. The company was instituted as a business corporation under the laws of New Jersey. Campbell Soup, presently, has a Zacks Rank #2 and a VGM Score of A.
CPB has a beta of 0.34 and a dividend yield of 2.8%. The company’s expected earnings growth rate for the current year is 5.6%. The company’s estimated earnings growth for the next five-year period is 3.9%.
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