When the Covid-19 crisis faded, Americans finally looked forward to a broader recovery, which on paper doesn’t necessarily incentivize the best sleep-well-at-night stocks. However, lingering headwinds – such as stubbornly high inflation – along with fresh negative catalysts (most notably a worsening geopolitical backdrop) require a rethink of reliable enterprises.
For instance, even though the benchmark S&P 500 index returned about 10% so far this year (a respectable figure, undoubtedly), recent trades have been muted. For example, in the business week ending May 26, the index only gained 0.24% of value. And in the trailing month, it’s up less than 2%. So, relative performance declines suggest investors should consider safe stocks for worry-free investing.
As well, folks just might want to survive this tricky segment of the new normal. Sure, it’s nice to acquire profits but not at the serious risk of severe losses. Therefore, the below reliable stocks for peace of mind could become supremely relevant.
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Headquartered in Plano, Texas, Diodes (NASDAQ:DIOD) is a global manufacturer and supplier of application specific standard products within the discrete, logic, analog and mixed-signal semiconductor markets. Fundamentally, it’s one of the best sleep-well-at-night stocks thanks to its massive relevancy footprint. Per its public profile, Diodes serves the consumer electronics, computing, communications, industrial, and automotive markets.
Even better, the above narrative actually means something for DIOD. Since the beginning of this year, shares gained nearly 26% of equity value. Over the trailing 60 months, DIOS shot up almost 177%, providing an attractive framework for safe stocks for worry-free investing.
Moving over to the financials, Diodes delivers solid stability in the balance sheet. For example, its equity-to-asset ratio pings at 0.7, ranked above 61.47% of its peers. As well, its Altman Z-Score hits 7.01, reflecting very low risk of imminent bankruptcy.
Finally, Wall Street analysts peg DIOD as a consensus moderate buy. Their average price target lands at $101.67, implying over 6% upside potential.
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If you want a top-shelf name among the best sleep-well-at-night stocks, Costco (NASDAQ:COST) stands in rare company. As a warehouse-style, membership-only retailer, Costco without any other context would seem like a risky idea amid so many uncertainties in the economy. However, Costco over the last several years has become a cultural phenomenon. Better yet, this phenomenon tends to attract a wealthier clientele.
In my article for TipRanks, I breakdown some of the consumer demographic details of the retailer. Basically, the biggest takeaway is that relatively younger and higher-income-earning shoppers visit Costco over its competitors. Therefore, if the underlying economy gets wobbly, presumably, Costco shoppers will be the last to be impacted. That makes COST one of the low-risk stocks for sound sleep.
As you might imagine, Costco benefits from strong financials, particularly in the operational realm. For example, its three-year revenue growth rate comes in at 14%, above 82.11% of its peers. It’s also consistently profitable, featuring a trailing-year net margin of 2.58%. This stat beats out 62.79% of sector rivals.
Lastly, analysts peg COST a consensus moderate buy. They also view shares hitting $542.57, implying 7% upside potential.
Imperial Oil (IMO)
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Because of the relatively deflated environment for the hydrocarbon sector combined with the political push for clean and renewable energy sources, Imperial Oil (NYSEAMERICAN:IMO) doesn’t seem relevant. To clarify, it appears that the company will eventually lose its relevance as green initiatives take over. However, contrarian investors may want to consider the Canadian petroleum specialist as one of the best sleep-well-at-night stocks.
Fundamentally, while the lift from oil-producing nations deciding to cut production in early April didn’t last long, geopolitical tensions can always rear their ugly head. Basically, with the war in eastern Europe still raging, hydrocarbons will likely become supply limited. Further, with a majority of companies implementing return-to-office mandates, auto traffic volume should rise.
As well, what could make IMO one of the defensive stocks for stress-free investing is its stability and consistency. With an outstanding three-year revenue growth rate of 28.5% and a trailing-year net margin of 13.1% (which beats out 65.7% of competitors), Imperial offers a solid case for reliability. Plus, analysts peg IMO as a consensus moderate buy with an average $61.51 price target. This forecast implies growth potential of 31%.
On the date of publication, Josh Enomoto did not have (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.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.