What are the best stock investments in a declining market? This is a pertinent question as the stock market wanders ever downward. The European debt crisis has investors and traders spooked even though many US companies have increased sales and money in the bank. Boeing – BA – has delivered its first 787. Both manufacturing and construction are up recently but the market is uncertain. This uncertainty is seen in the high VIX, the Chicago Board Options Exchange Market Volatility Index. The VIX has gone over 40 for the third time in its two decade history. Although the VIX is commonly referred to as the fear index it indicates market uncertainty and could, in general, predict stock price movement in either direction. In fact, the three times that the VIX stayed over 40 for a month the market rallies in the next month and the next year. It may be that the market decline is about to end. If that is the case what are the best stock investments in a declining market. Value based stock investing can be profitable if an investor first finds stocks with a margin of safety and intrinsic value and then buys at the bottom of the price curve.
With the sale of the first Boeing 787 Dreamliner there is the opportunity to invest in Boeing as it starts mass producing these $200 million jets. With over 800 already contracted for Boeing – BA – can expect a $160 billion cash flow just based upon currently completed sales. A long term investor can look at Boeing as one of the best stock investments in a declining market. The company has already made enough sales of its new jet to keep their production facilities busy for over a year and more orders are likely to come in, especially from expanding Asian markets. Dividend stocks can be especially attractive when purchased at a discount in a weak market. Stocks like Johnson & Johnson – JNJ, which has paid quarterly dividends without fail for half a century, are perennial cash cows. Selling everything from first aid salves to sophisticated medical devices the company is well diversified with a global presence. Proctor & Gamble – PG, is synonymous with consumer products and is generally considered one of the world’s best run companies. The company sells its products in every corner of the earth and has increased its dividends by almost ten percent since last year. Many would consider this stalwart one of the best stock investments in a declining market.
The best stock investments in a declining market are not limited to large cap companies. There are lots of startup companies with promise. Fundamental analysis of these companies is important as it is the accuracy of earnings estimates that is most important in predicting when promising small cap company will join the ranks of large cap companies in future years, making investors rich along the way. The point of this article is not to invest specifically in any of the stocks mentioned but to investigate investment opportunities in order to find the best investments in a declining market.