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Special Report

Stocks for a Slowing Economy

When the economy weakens--as it seems to have been doing for some time now--investors prize certainty. Shares of companies that provide the goods and services that consumers can't live without are treasured more than ever in troubled times.

After all, even if a recession causes you to lose your job, you're probably not going to cut personal spending by letting your garbage pile up in a corner rather than setting it out on the curb, for example. And like waste removal services, certain products like food and toilet paper are also largely immune to economic downturns.

Many companies that provide the basic staples of modern life aren't likely to grapple with a huge earnings slowdown in a weak economy. Even so, investors need to be just as careful in selecting these sorts of stocks as they are with any other. Here are several that our analysts rank as reasonable bargains.

  • General Mills (GIS): Sales of Wheaties and Cheerios probably won't go soggy in a slowdown, and the company's acquisition of Pillsbury broadens its geographical base.
  • Waste Management : For a while, this firm had as much debt as it had garbage. Now that it's cleaned up its act, investors might want to snag a few shares.
  • Kimberly-Clark (KMB): The company makes products with brands like Kleenex, Huggies, Kotex, and Cottonelle that
    consumers aren't apt to give up, no matter how bad things get.
  • Kroger  (KR): This master of the grocery store game has a lean cost structure and a knack for getting consumers to keep coming back.
  • Pepsi Bottling : Cola sales might have lost their fizz, but Sierra Mist and Aquafina are making this company look like a winner.

Craig Woker does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.