Secure global investments may promise a substantial 40% return.
In the face of economic downturns and Black Swan events, certain companies stand out as resilient and profitable. These crisis-proof companies share several key characteristics, as we explore with the examples of GTT and LVMH.
Essential Services and Stable Demand
Operating in essential or stable-demand sectors is a common trait among crisis-proof companies. For instance, GTT, a global technology and business infrastructure provider, serves multiple markets and geographies, allowing it to maintain momentum during economic uncertainty. Similarly, Medtronic, a leading name in the healthcare industry, continues to thrive due to the consistent demand for medical devices and services, regardless of economic cycles.
Strong Financial and Operational Foundations
Financial robustness is another crucial factor. Companies like LVMH, with healthy cash reserves and low debt, maintain operational stability and flexibility during downturns. GTT, too, boasts a strong financial standing, as evidenced by its record high order backlog of 342 ships at mid-year for its membrane systems used in LNG tanks on ships.
Diversification and Consistent Revenue Streams
Diversification across markets and geographies, as well as recurring revenue streams, insulate these companies from localized downturns. GTT's diversified business model, including its recent foray into green hydrogen production and transport through its subsidiary, Elogen, further strengthens its resilience.
Operational Agility and Risk Mitigation
Crisis-proof companies focus on maintaining delivery agility, flexible capacity, and cautious vendor management to navigate volatility without sacrificing quality or service continuity. GTT exemplifies this with its technical support and training services, as well as its use of its tanks as storage space in times of crisis.
Dividend Resilience or Growth History
Companies that consistently pay and increase dividends even during recessions tend to be more stable and attract investors during volatile periods. While specific dividend information for both GTT and Medtronic was not available, their strong financial positions suggest potential for dividend growth.
Market Outlook and Stock Prices
Despite challenges such as the war in Ukraine, galloping inflation, and resulting interest rate hikes making investments in the stock market significantly riskier, the outlook for crisis-proof companies like GTT and LVMH remains promising. The target price for LVMH's stock is 900 euros, with a 42% upside potential, while GTT's stock price target is 185 euros, with a 43 percent upside potential.
Steady rising profits in the coming years should continue to boost Medtronic's stock price due to its strong market position and reasonable valuation, with a target price of 115 euros and a 41% upside potential. However, potential impacts on Medtronic's pacemaker sales from weight loss surgery and the rise of weight loss medications remain uncertain.
In conclusion, crisis-proof companies like GTT and LVMH are well-positioned to weather economic storms and continue to grow, thanks to their essential or stable-demand sectors, strong financial and operational foundations, and resilient business models.
- Given the resilient and profitable nature of crisis-proof companies, it's not surprising that GTT, serving multiple markets with a robust financial standing, is well-equipped to maintain momentum during economic uncertainty in its role as a global technology and business infrastructure provider.
- LVMH, known for its healthy cash reserves and low debt, exemplifies the importance of financial robustness in times of economic downturn, as it ensures operational stability and flexibility for this luxury goods conglomerate.
