Zacks Investment Ideas Feature Highlights: Family Dollar Stores, Wal-Mart, AutoZone, Hasbro and General Mills

CHICAGO, Aug. 24, 2011 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: Family Dollar Stores (NYSE: FDO), Wal-Mart (NYSE: WMT), AutoZone (NYSE: AZO), Hasbro (Nasdaq: HAS) and General Mills (NYSE: GIS).

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Value is the Best Defense

When the stock market began to tumble in late July, many investors swiftly gave up on equities and ran to the relative safety of U.S. Treasuries. But the paltry 2.1% yield on the 10-year T-note doesn't provide much comfort.

The recent market weakness and heightened risk of another recession isn't a reason to dump equities altogether, however.

Attractive Yields

For investors with a long-term time horizon, stocks look pretty good. The yield on the Dow Jones Industrial Average is currently 3.2%, and the earnings yield (inverse of the P/E ratio) on the S&P 500 is an attractive 8.4%.

While recent economic data has been weak and the odds of a recession have risen, there is still a good chance we're just facing sluggish economic growth for the next couple of quarters. If this is the case, these metrics point to plenty of upside for stocks.

Moreover, investors should realize that not all stocks will get beaten up if we do enter a recession.

Value is the Best Defense

Studies have shown that the best protection against the loss of capital in a down market isn't earnings growth but rather valuation. Those former high-flying stocks with high double-digit or even triple-digit P/E ratios will get hit the hardest, no matter what their growth forecasts are. Stocks with low double-digit or single-digit P/E ratios, on the other hand, have much less downside risk.

Stocks That Bucked the Trend in 2008

Investors may be surprised to learn that there were 30 stocks in the S&P 500 that finished in the green in 2008. Granted, many were bought out earlier that year, and a few were biotechs with hit products. But take a look at some of the other top performers:

• Family Dollar Stores (NYSE: FDO): +36%
• Wal-Mart (NYSE: WMT): +18%
• AutoZone (NYSE: AZO): +16%
• Hasbro (Nasdaq: HAS): +14%
• General Mills (NYSE: GIS): +7%

Most of these are value-oriented retailers or consumer staples that were trading at reasonable prices before the crash.

But it's not just about value. Once a bull market resumes, investors want to own stocks with earnings growth potential so they don't miss out on the upside. Fortunately there are some stocks that offer both growth and value.

About Zacks

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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Disclaimer: Past performance does not guarantee future results. Investors should always research companies and securities before making any investments. Nothing herein should be construed as an offer or solicitation to buy or sell any security.

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SOURCE Zacks Investment Research, Inc.

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