Stay Defensive with Recession-Resistant Trades Now

While investors have largely soured on growth stocks, a few sectors are holding up well. Most of them are commodity-based companies, as that space has delivered strong returns this year.

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  • Some companies are also holding up well because business tends to be steady, no matter what’s happening in the economy. One of the better possible trades in the coming months could come from companies offering both.

    Agricultural commodities have been rising as geopolitical tensions and reduced fertilizer production have impacted the global economy. That trend appears likely to continue for the time being. That could bode well for any farming-related play right now, including that of Deere (DE).

    Shares are slightly down over the past year, having recently pulled back in the past few weeks and into Friday’s earnings report. Overall, earnings at the global agricultural supplier are down about 25 percent in the past year, but that could reverse higher later this year as demand for more investment in the farming space continues.

    Action to take: Investors may like shares here. Besides being a global leader in its industry, the company is a dividend growth play yielding 1.1 percent right now with room for further increases.

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  • For traders, the September $420 calls, last going for about $12.50, could deliver mid-double-digit returns in the coming months on a rally in shares. The strike price would put the stock back near its 52-week highs.

     

    Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.