Nervous, But Still Bullish? Then Try These "Correction Protection" Stocks on for Size

I took a very clear stance on the markets at the end of last week. I told you why interest rates are not YET restrictive, despite all the Fed-focused claptrap you’re hearing on TV. And I said it wasn’t time YET to bail on all your stocks and de-camp for the bear cave, regardless of the recent volatility.

Maybe you agree with me. Maybe you don’t. But if you DO, you’re probably still a bit of a nervous bull. You’re looking to use the pullback to put some money to work – but wondering which stocks can be trusted in this more-volatile environment. Let me see if I can help, using the tools available to Weiss Ratings Platinum subscribers (Call us at 877-934-7778 if you’d like to sign up at a special rate).

I started by creating a Stock Screener I call Correction Protection Stocks. The idea? Highlight which stocks held up the best in the recent turmoil, while also ranking highly in our grading system and possessing other attractive attributes.

First, I eliminated any stocks with a Weiss Rating of “D+” (SELL) or lower. I then screened out stocks with a market cap of less than $500 million and 30-day average trading volume of less than 50,000 shares, as well as those based outside the U.S.

Finally, I zeroed in on companies with dividend protection – a yield equal to or greater than the 1.8% yield of the SPDR S&P 500 ETF (SPY, Rated “B”). Then I sorted the list of 129 resulting names by 5-day total return, with the best performers at the top and the worst at the bottom. Here’s what the results looked like as of late last week:
                                                                                 Data Date: 2/1/2018

Topping the screener is Dr Pepper Snapple Group (DPS, Rated “B”), the beverage firm that just announced it would merge with the company behind Keurig coffee machines and pods. DPS shares rose 24.7% despite the market’s mini-meltdown.

Maxim Integrated Products (MXIM, Rated “B”) is another stock that got juiced by acquisition news, rising 10.7% in five days. CNBC reported that Japan’s Renesas Electronics Corp. was considering an offer for the semiconductor company, though Renesas later denied it.

Other standout performances stemmed from strong underlying financial results, including the 15.2% gain at Puerto Rican bank OFG Bancorp (OFG, Rated “C”) and 10.2% rise at mailing and shipping equipment maker Pitney Bowes (PBI, Rated “C-”). The Hawaiian shipping company Matson (MATX, Rated “C”) also managed a 10.1% gain, while the alternative energy natural gas pipeline company NextEra Energy Partners LP (NEP, Rated “B-”) gained 6.9%.

Even a few much larger, widely held stocks made my Top Ten list. Intel (INTC, Rated “B”) managed a 6.3% return despite the downward pull of the averages, while Lockheed Martin (LMT, Rated “B”) notched a 6% gain. Solid quarterly results helped both, while the upward trend in defense spending here and abroad have been pushing LMT higher for several months now.

Bottom line? If you think the bull market is still intact as I do, take a spin through my list of stocks that held up well in the recent correction. See if any of them make sense for your portfolio and buy ‘em. Or if you want more guidance and high-quality recommendations, just sign up for my High Yield Investing newsletter here.

Oh and one last thing: Like I said Friday, you don’t want to just follow a “set it and forget it” investing strategy that overemphasizes index mutual funds or ETFs anymore. In a more-volatile, late-stage bull market, you have to get more discerning with your hard-earned investment dollars. I know I am!

Until next time,

Mike