3 Ready-to-buy shares to buy right now

As China and the United States continued to exchange salvos in a trade war, political uncertainty as a result of the counterfeiting action in Washington, and the recent report that consumer spending was significantly reduced in August, many point out that we are prepared for to get into a recession.

The idea of ​​a recession may be worrying, but there are some steps investors can take to protect their portfolios from a financial downturn, including investment in companies that can withstand the turmoil – stocks like Franco-Nevada (NYSE : FNV) Idexx Laboratories (NASDAQ: IDXX) and Casella Waste Systems (NASDAQ: CWST) .

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Go for the Gold

When many people are looking for ways to play it safe, many investors are attracting gold. During the Great Recession, for example, when the S&P 500 plunged nearly 38%, the price of gold rose more than 19%.

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But this simple strategy comes with a variety of options, including bullion purchases, gold exchange traded funds or gold mining stocks. However, one of the best options currently available to investors is the Franco-Nevada royalty and streaming company. Digging metals off the ground is a capital-intensive endeavor, so mining companies often make agreements with royalty and streaming companies, giving them money back in advance for the rights to buy a certain amount of gold (or other metal) at a preset discounted price, or to receive a percentage of mineral production from a mine. Consequently, Franco-Nevada can benefit from the successful development of mining benefits, yet it is not involved in either the development of the projects or their business, thus reducing the risk.

Although Franco-Nevada has exposure to silver, platinum group metals, and other commodities, gold is the major contributor to the bottom line. In 2018, for example, gold accounted for 63% of the company's adjusted EBITDA. With 55 energy-related assets in the portfolio, the company is clearly interested in more than the yellow stuff, but with 38 precious metal projects in the advanced development phase and 200 more in the exploration phase, investors can rest assured that gold will continue to play a key role in the company's portfolio in the future. . In fact, management's stated intention is to generate 80% of its precious metal revenues over the long term.

This dog could have its day

Eating less often or continuing the recent Hollywood success of the multiplex is just one of the ways people can choose to tighten their belts during a recession. And when it comes to pets, they can wait a little longer to buy a new chew toy for Fido after he destroys the old one. But one area where people are not likely to get economic finances is to provide adequate health care for the little hairy friends. That is why Idexx Laboratories, which claims to be "the global leader in veterinary diagnostics, software and water microbiology testing," is a naturally appealing stock to have during steep economic downturns. Although the company provides services for a wide range of animals, from pets found in the home to farm animals, the former category is comprised of the largest business. In 2018, the companion animal welfare group (CAG) – ie pet health – accounted for 87% of total sales.

Idexx Laboratories has a geographically diversified footprint and delivers its solutions to customers in more than 175 countries. How does this relate to the economy? Customers outside the United States represented 39% of sales in 2018. This global exposure may dampen the company's risk in the event of a US recession.

There is nothing to get around with removing the garbage

Although some local initiatives can take a back seat in financially troubled times, there is no alternative for municipalities to neglect the local dump. As a result, companies that run garbage and recycling services, such as Casella Waste Systems, which operates in six states in the Northeast, are a compelling alternative for investors concerned about a recession. But it is not just the fact that Casella Waste Systems can expect demand for its services to remain strong through trying economic times that make it attractive. It is also the management's commitment to improving the company's financial health.

Image Source: Casella Waste Systems.

The company has reduced its total debt from $ 537 million in 2014 to $ 496 million. at the end of Q2 2019. Furthermore, it has reduced its consolidated net leverage ratio from 5.4 in 2014 to 3.2 at the end of the recently completed second quarter. S&P Global Ratings recognizes the safer financial position achieved by the company and upgraded its debt ratio from B + to BB- last February, and Moody's & # 39; s followed up with an upgrade from B1 to Ba3 last June . And the management recognizes that the work to strengthen the balance is not over. The company has targeted a consolidated net leverage ratio of 3 to 3.25 by 2021.

Besides the less debt-burdened balance sheet, the company's ability to generate strong cash flow makes it an attractive alternative for investors. While free cash flow accounted for 2.8% of sales in 2015, it represented 6.1% of sales in 2018, according to Morningstar . And management predicts that free cash flow will grow 10% to 15% annually through 2021.

The recession-ready stocks summarize

When considering how to prepare a portfolio for a recession, typical approaches are like getting exposure to gold – one of the most common investments in safe harbor. And for investors who think this is desirable, Franco-Nevada's business model as a specialized financier of the type is a compelling alternative. Those who prefer to avoid exposure to gold may be more interested in Idexx Laboratories and Casella Waste Systems – two companies that trade in products and services that will undoubtedly remain in high demand, even during the most challenging economic periods.