Costco, AT&T, Coca-Cola: Defensive Buys Before a Crash
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- Costco has failed to deliver positive annual revenue growth just once in 33 years and posted double-digit top-line growth only twice in the last 13 fiscal years, but trades at over 50x trailing earnings with a 0.5% dividend yield.
- AT&T trades at 9 times trailing earnings with a 4% dividend yield — the highest of the three — and just posted its strongest top-line growth in six years, with analysts projecting continued positive revenue gains.
- AT&T's revenue has still declined in four of the past six years, though the article notes a pair of spin-offs weighed on that trend.
- Coca-Cola has delivered annual payout hikes for 64 consecutive years, a streak extended by last month's boost, and runs a high-margin business that sells syrup and concentrate to bottlers and distributors.
- Costco's revenue dipped just 1.5% during the 2009 recession, and its annual membership fees — not merchandise margins — account for most of its profit, anchored by the $1.50 hot dog and soft drink combo.
Why it matters: Each 'recession-proof' pick carries a trade-off the article itself flags: Costco's reliability demands a 50x trailing P/E that the author calls 'ludicrous,' while AT&T offers the cheapest valuation and a 4% yield but has seen revenue decline in four of six years. The pitch is a segmented defensive play, not a blanket buy.
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