Hard Times Stocks: Bandages, Beans and Bullets
Are we at the bottom of the current economic collapse yet? Despite all the verbiage of the “experts”, nobody knows. This could be a deep recesion, a depression, or a fundamental change in the global economic structure. However, it has been true in all previous economic downturns and collapses that some businesses do well despite many failing.
What should an investor look for during grim economic times as a way to potentially make significant profits in the stock market?The military had a wise and concise list of what to get in order before a fight: Bullets, Beans and Bandages.
Of course we all hope that our current economic problems do not lead to military conflict, major civil unrest, or war, the three B’s are still a useful guide to how you might make money in carefully selected stocks.
First, let’s consider Bandages. A bad economic situation would be made much worse by a serious disease outbreak, especially a disease for which we are not prepared. One threat on the horizon that medical experts agree is serious is avian influenza. Fortunately, researchers are hard at work on vaccines to prevent this rare disease from becoming widespread in people. One company to pay attention to is iBioPharma, Inc (OTCBB: IBPM), which owns commercial rights to technology developed by the Fraunhofer USA Center for Molecular Biotechnology in Newark, Delaware. This company has technology for creating vaccines for avian flu and other diseases. A fascinating thing about their approach is that they use tobacco plants to produce the vaccines more cheaply than traditional methods. In tough economic times, keeping costs low matters, and sometimes innovative approaches lead to lower costs.
Now, let’s think about the Beans part of the equation. Well known branded products are struggling in the stores these days and the companies’ stock prices show it. Have you taken a look at Procter & Gamble (NYSE: PG) or Kraft Foods (NYSE: KFT) lately? They are not speculative, high-risk stocks, and yet their prices have tumbled. By contrast, take a look at Family Dollar Stores, Inc. (NYSE: FDO). Over the past year, this company’s stock has gone up in value. It sells low priced consumer products to people who can’t afford to shop in the higher priced stores. That is a lot of people these days, and the numbers are growing.
Finally, let’s consider the Bullets part. Take a look at Smith & Wesson Holding (NASDAQ: SWHC) or Sturm Ruger and Co. (NYSE: RGR). Sales are rising and so are their stock prices. If times get tougher, the natural instinct that people have to protect themselves and their families may continue to create business and stock price success for these companies.
Note: This article is intended for educational purposes only and should not be interpreted as a recommendation to buy or sell any particular stocks or other investments. The author of this article does not own any position in the stocks mentioned here.
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