Three Stocks to Ride Out Market Turbulence Amid Valuation Warning
The stock market is flashing a valuation warning according to two widely followed metrics. The Buffett indicator, which measures the ratio of total stock market capitalization to U.S. GDP, has surpassed 230%. This level is higher than the threshold that Warren Buffett considers 'playing with fire', which he set at 200%.
Another metric, the S&P 500 Shiller CAPE ratio, is at its second-highest level ever, just shy of its all-time high in early 2000. This was right before the dot-com bubble burst.
Despite these warning signs, three stocks are likely to weather the storm: Johnson & Johnson (JNJ), The Coca-Cola Company (KO), and Chevron (CVX). These companies have a proven track record of resilience during market downturns.
Johnson & Johnson's healthcare products enjoy steady demand regardless of economic conditions. Its 64 consecutive years of dividend increases make it a Dividend King. The company is also on track to generate over $100 billion in annual revenue this year.
The Coca-Cola Company has a similar history and stability, with its beverage business being less affected by market fluctuations. It's another Dividend King with 64 consecutive years of dividend increases.
Chevron, while not a Dividend King, has increased its dividend for 39 consecutive years and boasts a high yield of 3.7%. Its history dates back to 1879, making it one of the oldest energy companies in the world.