The S&P/ASX 200 Index (ASX: XJO) continues to be volatile.
Is a recession coming? Probably, at least that's what the GDP figures will likely show. But the share market is forward looking – it's already down 27% since the declines started. It could fall further if it looks like ASX earnings are going to be hit.
No business can be completely insulated against share price falls. In the short-term, share prices are simply decided by what price sellers and buyers are willing to transact at.
A lot of businesses are going to see an earnings decline. Are there some shares that may be able to protect against a coronavirus recession? Here are three ideas:
TPG Telecom Ltd (ASX: TPM)
Since the market started falling in February, the TPG share price is only down 9.3%.
A telco is well positioned to navigate through this difficult period. TPG receives monthly payments from its customers – if people want to keep using the internet then they'll need to keep paying their bill this year. The internet has really helped my household so far, whether it's communicating with other people or watching things on TV. I definitely plan to keep paying my telco.
Don't forget that TPG is on course to merge with Vodafone Australia which will open up a number of synergy benefits and offers good upside potential over the next 12 months.
I think it's the best-placed telco to grow during this period, particularly if people are looking for low-cost telecommunications.
Coles Group Limited (ASX: COL)
Supermarkets are one of the few places that people can still go to. Panic buying seems to have reduced, but Coles has seen a huge rise in sales in the short-term.
Coles recently said that it had been selling Christmas-level volumes of products to the public, which will likely mean that the bottom line will get a big boost in FY20. It will be interesting to see if sales fall in the upcoming months meaning customers have simply brought forward sales.
But people will need to keep eating and many less people are going to restaurants or cafes, so supermarkets will probably see higher sales than normal whilst the pandemic is ongoing.
Looking at the trailing dividend, it currently has a grossed-up dividend yield of 5.8%.
Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)
The healthcare company is one of the few businesses to see its share price rise materially during this period. Since 21 February 2020 the Fisher & Paykel Healthcare share price has gone up 10%.
It's one of the businesses involved in actually helping in the fight against the coronavirus. Its respiratory humidifiers and consumables are directly involved in treating patients.
There has been an increase in global demand and it has ramped up its manufacturing output. It's also benefiting from stronger sales in the Homecare product group and a weakening of the New Zealand dollar.
It's now guiding operating revenue to be approximately NZ$1.2 billion and net profit after tax to be approximately NZ$260 million to NZ$270 million.
Foolish takeaway
Coles may already have seen the best of sales, so I think it could be better to focus on TPG and Fisher & Paykel. There's a long way to go with this global pandemic, so there could be a lot more demand for healthcare products.
