A Potential Second Round of Shutdowns and Where to Invest Now

I try not to watch too much news. Mostly because anything I hear will be contradicted an hour later. And because of the biases. I like data and facts, which is why I’m here on the Weiss Ratings analyst team.

But, even now, it’s hard to know which data to believe. We’ve got reports of people not being tested who receive positive results by phone and accusations of inflated numbers here in Florida.

People, politics and personal agendas are interfering with data.

We’ll never know how much of any of this is actually true. However, we do have to acknowledge a second round of shutdown is not impossible. Miami took one step back earlier this month, and here in Palm Beach, we’ll be stuck in phase 1 for who knows how long.

I’m not here to get political. I’m here to talk about data and trends.

All over the U.S. restaurants and bars still have restrictions. More people are preparing food at home and spending time baking with their families.

So, who benefits from the current atmosphere? Companies in the food, beverage and tobacco industry.

Pantries and fridges will be overflowing, grocery shelves will be cleared. I know some people are still shopping in this manner to minimize those trips out. And if you’re a consumer of alcohol or tobacco, those are ones that necessity lists as well.

Even if we don’t reach the point of a “full shutdown” again, I would guess these staples will still be bought in larger quantities for the foreseeable future.

A quick visit to our stock screener on weissratings.com gives us all the stocks in the food, beverage and tobacco industry sorted by rating. Let’s check in on the top three safest ways to play this trend.

Our top-rated is General Mills Inc (NYSE: GIS, Rated “B”).

General Mills has been around since 1866 and is a giant in branded consumer foods. Its hands are in every aisle from cereal to yogurt, even frozen-foods and salty snacks.

As people started stocking pantries and freezers, GIS saw the benefits. For the quarter ending May 31, the company saw net sales increase by 21%.

In a time when many company’s financials are falling apart our Weiss Safety Ratings upgraded General Mills. The numbers don’t lie: Operating cash flow increased 115% and earnings per share increased from 74 cents to $1.02.

Shares are up 20% since the beginning of the year, meaning that investors are noticing the potential. The difference with General Mills, is that it’s not trading at extreme multiples like many consumer staples right now.

The company also announced that it will still pay its quarterly dividend of 49 cents. In a land where dividend stalwarts who have paid for 50 years are being forced to cut or suspend payouts, this is huge.

The Weiss Ratings is unbiased and doesn’t play into political agenda, and it’s pointing a big green arrow at General Mills.

Who else made the list?

Our first runner up is Swedish Match AB (OTCMKTS: SWMAF, Rated “B”). You may have heard of its Red Man brand, which was the only one I had heard of in its vast portfolio. But the company is a market leader in smokeless tobacco around the globe.

Rounding out the top three is household staple Campbell Soup Company (NYSE: CPB, Rated “B-”).

If you haven’t checked out the stock screener function on the Weiss Ratings website, it’s a great tool. You can sort by sector or industry or search for stocks with certain fundamentals.

And in this case, it helps identify best ways to play a trend that seems to have no end in sight.

Best,

Kelly Green