Before we look at the recession-proof stock to add to your watchlist, let’s take a look at the market and some key levels.
The market fell apart after the latest round of Consumer Price Index numbers reported that we had a slight increase in prices compared to last month. That all but cements the need for the Fed to keep up with its aggressive rate hikes.
It took one day to erase five positive days and just like that, we’re back talking about the crucial 3900 line in the S&P 500. A break below that line and we’re down to 3750 or lower.
Given the market volatility and rate hikes to follow, it’s time once again to turn to stocks that are in better positions to weather a recession.
Here’s one company that has a track record of earnings growth that you should be looking at to add to your watchlist.
Leidos Holdings (LDOS) provides services and solutions in the defense, intelligence, civil, and health markets. They are an American defense, aviation, information technology, and biomedical research company that provides scientific, engineering, systems integration, and technical services.
Leidos merged with Lockheed Martin’s IT sector, Information Systems & Global Solutions, in August 2016 to create the defense industry’s largest IT service provider.
Since 2017 they have had a history of EPS and revenue growth.
Their P/E ratio is 18.73 and has a forward P/E ratio of 13.60, implying LDOS is trading at a discount.
They are also in a select group of stocks that are up year-to-date.
While it’s fallen slightly out of favor since April, it’s a low-risk business that relies mostly on government contracts across several recession-resistant industries. Based on its compound growth rate, I see a fair market value of $110, giving this stock plenty of room to move higher.
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