Key Points
- GIS and SBUX stand out as deep-value options for investors looking for value in today’s arguably rich market.
- GIS and SBUX have ongoing turnaround plans and they could show signs of paying off going into the new year.
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Who would have thought that September would be such a good month for stocks? It’s typically the nastiest month of the year for market returns, but things were different this year. Before you look to buy stocks while breathing a sigh of relief now that September has ended, it’s the month of October that also tends to be not such a great year for markets. Indeed, a good September might pave the way for tougher sledding as the weather (and maybe the market weather) gets a bit chillier.
With some brilliant investors, such as Leon Cooperman and Jeremy Grantham, raising concerns about the longevity of the current market rally, it’s natural to want to be a net seller of stocks now that the fourth quarter has arrived. Whether we’re in the “latter innings,” somewhere in the middle, or closer to the start, I think it’s just a good idea to be ready to play some defense, well ahead of time.
Indeed, perhaps going for some safer dividend stocks well ahead of a volatility spike could make a lot of sense. With the U.S. government shutdown causing ripples in the market waters to start the month, it might be time to check in to see how the market’s lower-beta names are faring. Here are three names that could prove to be the best defensive bets this fall:
General Mills
General Mills(NYSE:GIS) shares probably couldn’t be bothered by a government shutdown or a return of market-wide volatility. Shares of the consumer packaged foods firm have been stuck in a multi-year bear market, now down close to 44% from its 2023 all-time high.
Undoubtedly, the cereal maker has some serious headwinds weighing down quarterly sales and, of course, the share price. Despite the challenges, management is confident that it can turn a corner as the consumer feels a bit of a pinch at the grocery store’s middle aisle.
New products and marketing might be able to jolt sales, but until a quarter delivers a big upside surprise (the last quarter was good, but not good enough for investors), GIS shares stand out as a show-me story. For those with the patience to stick around, there’s a nice 4.9% dividend yield to collect. And with a beta close to zero (it’s actually slightly negative), there might be shelter from the next market storm.
Starbucks
Starbucks(NASDAQ:SBUX) stock has actually shed around 2% of its value in the past five years. Undoubtedly, it’s been a rough patch amid a pressured consumer. Still, the ailing Seattle coffee shop chain has one big thing going for it: CEO Brian Niccol. Indeed, Mr. Nichol is a great turnaround artist who will probably pull it off again. For now, investors need to give the man more time to get the job done. With 900 job cuts and plans to close hundreds of stores, Starbucks’ turnaround seems well underway.
With a strong, premier brand, I do view Starbucks as a company that will boom once consumer sentiment booms again. Pumpkin Spice season and new plans to beef up the protein lineup might just help fuel a resurgence unlike any other. In the meantime, shareholders can treat themselves to a nice 2.93% dividend yield while they wait for a sustained rally. The stock is still down around 33% from its all-time high hit all the way back in early 2021.
Though Starbucks isn’t exactly what most would consider a “safer” stock, I find it to be a fantastic value that’s severely oversold, with catalysts that could spark a turnaround, even if the market is ready to run into a few October roadbumps.