It is the ultimate bunker portfolio.
Amid the market tumult, a handful of stocks have seen their share prices ratchet up to record highs in recent weeks. And many of them are connected by a curious, if disconcerting, thread: Among them, they provide an investor with essentials for any respectable fallout shelter -- makers of bottled water, canned goods, dehydrated broth, gas masks and auxiliary generators.
A portfolio of the 18 companies that reached their peaks in recent weeks has walloped the broader market, which is down about 1.5% this year, a sign some investors may be taking the prospects of financial Armageddon more seriously than one might think.
Hormel Foods (HRL, news, msgs), the 120-year-old producer of that dugout staple, Spam, hit an all-time high of $44.41 on Sept. 7. The company's stable of long-life provisions, from instant packets of dehydrated broth to wrapped sausages, could be critical for weathering even the most prolonged storm.
Bottled-drink-maker Dr Pepper Snapple (DPS, news, msgs), whose brands include DejaBlue purified drinking water, has soared 35% this year. The company also makes Schweppes ginger ale, great for any gnawing queasiness.
Also in the bunker club is Cummins (CMI, news, msgs). The maker of a range of auxiliary power generators, in addition to truck engines, is up more than 78% this year. Shares of the Columbus, Ind., manufacturer hit an all-time high of $84.69 on Sept. 3.
Hard hats and gas masks? Airgas (ARG, news, msgs) makes both. Shares of the Radnor, Pa., company, which spiked in February after a hostile bid from rival Air Products & Chemicals (APD, news, msgs), has since added to those gains, hitting its best-ever close, at $66.99 on Aug. 27.
"If it's the end of the world, what do you buy? Canned foods, guns and the generators," said Keith Springer, the president of Capital Financial Advisory Services. "There are a huge number of people who feel this is the end of the world."
Of course, stocks trading at such lofty heights aren't necessarily a tantalizing buy. But the bunker portfolio, while vastly oversimplified, does reflect investors' preference for companies with products that are relatively immune to economic swings and whose conservative strategies are suited to these uncertain times.
"This is a very unusual economic cycle we're going through. We haven't been through anything like it in any of our lifetimes, and we don't know how it's going to play out," says Dorsey Farr, an investment adviser in Atlanta. "We don't see where this economy is going, and some of the potential outcomes are frightening."
Hormel notched up its 44th consecutive year of dividend increases and raised its earnings forecast three times this year as growing sales of its packaged foods allow the Austin, Minn., company to "grow despite economic turmoil."
Ventas (VTR, news, msgs), a health care real-estate investment trust, touts itself as having all a conservative investor could ask for -- "reliable and growing cash flows," "strong liquidity and limited debt" and "a safe cash dividend with a long history of dividend growth," all in a defensive business that hits the sweet spot at the intersection of health care and senior housing. Ventas is up 21% this year and hit its all-time high of $53.43 on Sept. 3.
J.M. Smucker (SJM, news, msgs), a maker of jams, jellies and peanut butter, hit an all-time peak of $63.75 in late July after posting its ninth consecutive quarter of better-than-expected earnings amid a boom in eat-at-home families.
"Consumers are relying more on basic pantry items including coffee, peanut butter and jelly, and home-baked items, and our brands play a lead role in all of those categories," the Orrville, Ohio, company said.
Ball (BLL, news, msgs), a maker of metal cans and packaging, hit its high in August after notching record second-quarter earnings. The Broomfield, Colo., company recently increased its plans for stock buybacks.
Mead Johnson Nutrition (MJN, news, msgs), a maker of baby food -- an essential part of any family-friendly bunker portfolio -- hit its high of $56 on Sept. 3.
Big Macs aren't on offer to anyone holed up underground, but McDonald's (MCD, news, msgs) is trading near its all-time high, thanks to its big presence in faster-growing countries outside the United States and, no doubt, man's basic need for burgers during any economic cycle.
Stocks at all-time highs in recent weeks
| Company | Products or services | Record high | Date | YTD % |
|---|---|---|---|---|
Goggles and hard hats | $66.99 | Aug. 27 | 35.7 | |
Auto parts | $221.54 | Sept. 8 | 39.4 | |
Food and beverage packaging | $59.60 | Aug. 2 | 13.5 | |
Logistics | $68.42 | Sept. 8 | 15.2 | |
Information technology | $63.94 | Aug. 3 | 39.6 | |
Engines and power generators | $84.69 | Sept. 3 | 78.6 | |
Bottled drinks | $40.24 | July 26 | 34.7 | |
Toys | $44.59 | Aug. 18 | 34.2 | |
Processed meats | $44.41 | Sept. 7 | 14.6 | |
Personal-finance software | $45.10 | Sept. 8 | 44.3 | |
Peanut butter and jelly | $63.75 | July 27 | -1.7 | |
Fast food | $76.26 | Sept. 8 | 21.8 | |
Infant nutrition | $56.00 | Sept. 3 | 25.6 | |
Software | $121.45 | Sept. 3 | 62.4 | |
Senior housing | $53.43 | Sept. 3 | 21.0 | |
Electricity and natural gas | $57.66 | Sept. 7 | 13.7 |
This article was reported by Jonathan Cheng for The Wall Street Journal.
