They say that when the US economy sneezes, the world gets a cold. After all, it’s the largest single country economy t0day. If it’s in a poor state, the worlds feels the impact. For that reason, I like to keep an eye on latest developments there. This is especially true right now, when all countries are trying to climb out of a sudden recession that has impacted almost each and every FTSE 100 stock.
Leading economic indicators still weak
Unfortunately, the latest leading indicators of US economic health aren’t inspiring. Weekly jobless claims rose to 1.4m last week. Not only is this higher than economists expected, there’s also a break in the trend of falling initial claim numbers seen in the past weeks. High-frequency labour market data is critical right now, because it gives a constant account of how much activity is taking place in the economy. Rising jobless claims means that employers are laying off people, which suggests a weakening economy.
When this is coupled with the UK’s already poor economic data, it suggests some more pain in store, even if for the short term. I think it’s a good idea to recession-proof an investing portfolio now. Investing £1,000 through a Stocks and Shares ISA is even better, to avoid additional tax liabilities, especially now when income insecurity is high for many.
FTSE 100 stocks to buy
One FTSE 100 stock I like is the Anglo-Dutch consumer goods’ giant Unilever, which reported an earnings increase on Thursday despite a marginal sales decline. I like its earnings per share (EPS) growth of 6.4%, which gives comfort from the dividend perspective. Now, the ULVR dividend yield isn’t exactly impressive at 3.1%. But, at present, continuity counts for a lot. FTSE 100 companies have slashed dividends left, right, and centre, making it a hugely disappointing time for income investors. With an EPS increase, I think the ULVR dividend just became more secure. It’s long-term share price chart is also encouraging for growth investors.
The FTSE 100 speciality chemicals and sustainable technologies company Johnson Matthey is another one to consider. Its latest update, also released on Thursday, shows weakness, but it’s an otherwise financially stable company. Its revenues are rising and it has also consistently made profits. For income investors, who may be left holding the bag in the wake of the recession, JMAT’s dividends like ULVR’s, may also be some small consolation. The company has cut its dividends, but it still pays them and has a 2.5% yield.
Finally, GlaxoSmithKline, the FTSE 100 pharmaceuticals and healthcare giant is a stock to buy. Its share price is relatively inexpensive, despite the spotlight it has found itself in recently while developing a Covid-19 treatment. Its price-to-earnings (P/E) is at 14.8 times, and this when it also has a dividend yield of 4.8%.
The point I’m making here is this: there’s no dearth of high-quality FTSE 100 stocks that can be bought today to recession-proof a portfolio. And these are just three of them.