Question: What do the following companies have in common?
- Finish Line
- Dollar Tree
- Panera Bread
- Rent-A-Center
Answer: They all came through the financial meltdown of 2008 with flying colors, and continue to thrive in today’s volatile market environment.
2008 was a tough year for most companies. Red ink. Dividend cuts. Bankruptcies. But not all companies succumbed to the dark forces at play during that historic episode in market history. Some companies not only survived, but actually thrived — posting solid profits and increasing prices while those around them struggled just to stay afloat.
So what do these bulwark businesses have that enabled them to escape the carnage of 2008? Among other things, they all have
- Strong management teams
- Opportunistic business strategies
- Dominant market positions
- Increasing revenue, cash flow, and earnings
- Strong balance sheets
These are the kinds of companies I’d like to own when economic uncertainty and market volatility are at extremes. While there are no guarantees that these companies will repeat their past success when the next financial crisis hits, I’d rather bet on a proven winner than an also-ran.
There were hundreds of companies that managed to get through 2008 with their stock price higher than it was at the end of 2007, but there were very few who have continued to grow their sales, earnings, and stock price consistently since then. Shown below is a list of names that made the cut.
Now that you have a list of stocks that not only withstood the extreme stress of the 2008 market environment, but have also thrived in the years since then, what should you do with it? I’m not making a wholesale recommendation to go out and buy the stocks on this list. But I do believe that these companies have demonstrated an extraordinary resiliency in the face of economic turmoil. If you’re worried about the near term future for the economy and the stock market, but you want to stay invested in stocks, this list is a good starting point for further research.
This article was published on the Marketwatch.com website on June 18, 2012. Click the link below to see this and other articles by Erik Conley.