Buying stocks has proved to be one of the best ways to generate wealth over time. The strategy has beat buying gold, bonds, real estate, and even cryptocurrencies. Deutsche Bank (NYSE: DB) analysts found that over the past 100 years, equities beat out gold by 5.6% per year, housing prices by 6.6%, Treasuries by 6.8%, and oil by 8.4%. If you want to become financially independent, the best chance you have is by investing in stocks.
But it’s not going to be a straight line to riches. You will encounter detours on the path in the form of corrections, crashes, and bear markets. However, smart investors understand every sharp price drop is an opportunity to buy stocks at a discount.
Although there have been 27 bear markets in the S&P 500 since 1928, there have been 28 bull markets that followed. On average stocks lose 35% during bear markets, but gain 111% during a bull run. Such downdrafts typically occur every 3.5 years (the last one ended in October 2022), but since World War II they have happened every five years.
That doesn’t mean we have a few years before the next one occurs. One can happen next week — or tomorrow! It does mean you shouldn’t be shaken from your belief to invest in stocks. There are bargains to be bought even if the market is rising now. What follows are three no-brainer stocks to buy in December regardless of how the market goes.
Consolidated Edison (ED)
A regional electric utility like Consolidated Edison (NYSE:ED) makes for a perfect no-brainer stock. ConEd, as it’s known, provides electricity, natural gas, and steam to New York state. Investors typically seek out utility stocks for their safety and their dividends and get both in droves from the New York power company.
ConEd has been in business for 200 years, has paid a dividend for 100 years, and has raised the payout for 49 straight years. That rock-solid track record puts it at the doorstep of being a Dividend King. It also gives ConEd the distinction of having the longest streak of dividend increases for any utility in the S&P 500. It’s why utilities were considered widows-and-orphans stocks. The payout is currently yielding 3.50% annually.
But the utility isn’t going to be a firebrand in your portfolio. It’s not a growth stock. You buy utilities for their reliability. ConEd isn’t able to raise rates at will but relies upon the fair-mindedness of regulators to increase them over time. Utilities need to invest not only in maintaining their infrastructure but also in upgrading and building new systems. They are also entitled to make a profit.
Although utilities used to be monopolies (they still are in many ways), there is more competition now in the energy sector. Still, it makes Consolidated Edison a good choice for the long-term section of your portfolio where a steady income stream can help juice returns.
Cardinal Health (CAH)
Another no-brainer dividend stock to buy is Cardinal Health (NYSE:CAH). The drug and medical products distributor is one of the largest in the country and serves nearly 90% of all U.S. hospitals, more than 60,000 U.S. pharmacies, and more than 10,000 specialty physician offices and clinics. It also provides more than 3.4 million patients with more than 46,000 home healthcare products.
Pharmaceuticals are its largest revenue source generating over $51 billion in fiscal first-quarter sales. That’s up 11% year over year. The segment is also Cardinal’s most profitable representing 88% of total operating income.
What makes Cardinal Health a no-brainer stock is healthcare is essentially non-negotiable no matter what economic conditions are like. Not only do individuals need their prescriptions, but medical facilities have to provide care and need the pharmaceuticals, equipment, and supplies to provide it. That’s not to say the stock will run in a straight run higher, though shares are up 53% from recent lows.
Cardinal just ran into a problem with its Monoject syringes where a rebranding changed their dimensions. That made them incompatible with infusion pumps from Becton Dickinson (NYSE:BDX) and could lead to injury or death. The Food & Drug Administration warned healthcare providers not to use the syringes after a recall was initiated. This is simply a hiccup on an otherwise profitable trajectory higher.
The distributor recently raised full-year earnings guidance on the strength of its pharmaceutical segment’s results. Cardinal Health expects even stronger profits from the business, which makes its stock an easy choice to recommend.
AeroVironment (AVAV)
War is an unfortunate global reality. AeroVironment (NASDAQ:AVAV) is a defense contractor whose unmanned vehicles will play an increasingly important role in such conflicts. Artificial intelligence (AI) will end up directing many of these clashes and AeroVironment’s acquisition of Tomahawk Robotics for $120 million shows it plans to be part of the revolution. Tomahawk is a leader in AI-enabled robotic control and integrated communications systems.
AeroVironment just released third-quarter results showing a 62% surge in sales, profits that quadrupled, and a funded backlog up 15% to $487 million. It indicates stronger growth to come in the future.
President and CEO Wahid Nawabi said, “Our optimism not only reflects near-term demand dynamics but also reflects an ongoing shift in battlefield priorities to the more frequent use of distributed, intelligent, multi-domain unmanned systems.”
AeroVironment’s technology will reduce the number of human combatants in future wars. Unfortunately, the civilian toll of war will remain unconscionable.
AeroVironment’s stock is not cheap. It trades at 60 times next year’s earnings and five times sales. As a premiere stock in the industry, though, it can grow into its valuation. I might not back up the truck on this defense stock at these prices, but I still see it as a no-brainer to buy in December.
On the date of publication, Rich Duprey held a LONG position in ED and CAH stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
