These six consumer brand companies make the best buy and hold stocks to hold during an upcoming recession. This is due to their long-term value and quality earnings. As a result, investors in these stocks have a good chance of limiting the damage to their portfolios due to a recession. Moreover, once the market turns around, these will be some of the first stocks to rebound to their f0rmer heights and even beyond.
Most of these stocks pay good dividends and have a strong brand appeal. That also helps keep their earnings and dividends stable or reasonably strong during an economic downturn. As a result, investors are likely to own these stocks for the long-term.
Let’s dive in and take a look at these six stocks:
| Ticker | Company | Price |
| PEP | PepsiCo, Inc. | $167.23 |
| HRB | H&R Block, Inc. | $36.34 |
| MAT | Mattel, Inc. | $24.99 |
| F | Ford Motor Company | $13.59 |
| PLAY | Dave & Buster’s Entertainment, Inc. | $36.66 |
| MCD | McDonald’s Corporation | $248.90 |
Buy and Hold Stocks: PepsiCo (PEP)
- Market Cap: $230 billion
PepsiCo (NASDAQ:PEP) is a major consumer brand name company with an attractive 2.79% dividend yield and good earnings prospects going forward. In addition to PepsiCo beverages, the company owns and distributes Frito-Lay and Quaker Foods brand name foods.
PepsiCo reported 9% GAAP revenue growth in the first quarter (Q1) and what it calls “organic” growth of 13%. Moreover, its earnings per share (EPS) rose 146% to $3.06 in Q1 from $1.24 a year earlier. On a non-GAAP core basis, EPS rose slightly to $1.74 from $1.72 per share. So, its Q1 earnings were flat.
However, for 2022, the company said that it expects organic revenue growth of 8%, up from 6% earlier. In addition, the company said it expects non-GAAP EPS growth of 8% for the year. In other words, there is steady growth ahead for this company.
On top of this, PepsiCo has spelled out exactly what it is going to do for shareholders. In its quarterly report, it said it would spend “approximately $7.7 billion, comprised of dividends of $6.2 billion and share repurchases of $1.5 billion.” This $7.7 billion works out to 3.34% of its $230 billion market value as a total return for shareholders. That is a very good return for them and should help push the stock higher even if there is a recession.
H&R Block (HRB)
- Market Cap: $5.8 billion
H&R Block (NYSE:HRB) is a do-it-yourself tax prep software and services company. Everyone has to do their taxes. This gives the company and the stock a very strong brand name in this field.
Analysts forecast that H&R Block will make $3.46 per share in 2022 and $3.68 in the fiscal year to Jun. 30, 2023. So, at a price of $35.94 on Jun. 3, 2022, HRB stock has a forward P/E multiple of 9.8x.
With its $1.08 per share, HRB stock has a dividend yield of 3%. In addition, it has paid dividends every year for the past 32 years. That makes investors want to buy and hold this stock on a long-term basis.
Buy and Hold Stocks: Mattel (MAT)
- Market Cap: $8.63 billion
Mattel, Inc. (NASDAQ:MAT) is a Christmas stock. Everyone has to buy toys for their kids for Christmas, recession or not. In that sense, demand for its products is inelastic in nature. It’s a real brand name company as it has been around forever. Everyone knows that Mattel means high-quality kids’ toys.
And this is shown in the forecasts, earnings, and valuation of the stock. For example, analysts forecast revenue growth of 7.4% for 2023. In addition, they foresee earnings will rise from $1.49 per share to $1.91 in 2023, a gain of 28% over the next year. So recession or not, Mattel is going to hit with kids.
At $24.95 as of Jun. 4, MAT stock trades on a forward P/E multiple of 12.8x. This is very cheap for such an iconic brand name company that deserves to be one of the top buy and hold stocks.
Ford (F)
- Market Cap: $54.5 billion
Ford Motor Company (NYSE:F) is taking its move into electric vehicles (EVs) very seriously. The company announced on Jun. 2 that it would invest $3.7 billion in new production, including $2 billion to speed up the production of its EV Ford 150 Lightning electric pickup.
This will increase the output to 150,000 EV pickups. This is still much lower than the 1.4 million EVs that Tesla (NASDAQ:TSLA) is forecast to produce this year. But at least Ford is getting serious about moving into EVs.
These trucks are high margin and will help the company make serious bank this year and next. For example, analysts now forecast that revenue will rise from $144 billion to $159 billion by the end of 2023. That represents a sales gain of 10.4%. In addition, analysts now forecast EPS will rise at a similar rate of 12% from $1.93 to $2.16 by the end of 2023.
So, Ford has good earnings baked in, recession or not. Moreover, the stock is very cheap. At $13.50 as of Jun. 4, it is at just 6.25x forward earnings for 2023. On top of that, Ford has an ample dividend of 40 cents. Additionally, the stock has a dividend yield of 2.96%. That makes F stock one of the best buy and hold stocks out there.
Buy and Hold Stocks: Dave & Buster’s (PLAY)
- Market Cap: $1.77 billion
Dave & Buster’s Entertainment (NASDAQ:PLAY) owns and operates 142 all-in-one entertainment/game room/restaurants. You can take the whole family there, especially on birthdays, and set the kids free to play games while sipping a beer and watching the game or talking with your family.
As a result, revenue is set to rise 26% this year and 11% in 2023. There’s no hint of a recession here. Moreover, earnings are forecast to rise 46.6% this year to $3.24. Analysts forecast a gain of 19% in 2023 to $3.86. Again, no slowing down here, as families need to relax, recession or not.
This puts PLAY stock on a forward multiple of just 9.3x earnings for 2023, a very cheap multiple given its projected growth. This makes the stock one of the best quality consumer brand stocks to invest in going forward.
McDonald’s (MCD)
- Market Cap: $183.5 billion
McDonald’s (NYSE:MCD) is one of the best buy and hold stocks to own during or close to a recession. The simple fact is that people will still go to fast-food restaurants in America, no matter what the economic times.
This can also be seen in analysts’ forecasts for sales and earnings over the next two years. This is the largest quick-service restaurant in the world, but its sales are still seen as growing over 4.4% next year to $24.47 billion.
Moreover, EPS is forecast to rise 8.7% in 2023 to $10.75 per share. That puts MCD stock on a forward multiple of 23 times for 2023. This is not cheap, but it represents the quality of earnings that will likely be very stable during an upcoming recession. In fact, I can see the P/E rising as investors flock to this quality buy and hold stock for the long-term.
On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.