In April 2009, the S&P 500 had lost more than a third of its value over the prior year. As recalls, “No one knew if the worst was over — or had just begun,” recalls Stock of the Month’s Amy Calistri.

There’s no doubt it was a scary time for investors. This was back when you had no idea what was going to happen any given day. The market would be up 2%  and the next day drop 3%. Most investors didn’t want to touch stocks.

But I don’t have to tell you that when investors are most fearful, the best opportunities appear. “I believed then — as I do now — that you can find the right investment for any market condition,” said Amy in July’s Stock of the Month.

Back then, Amy picked shares of U.K.-based Diageo (NYSE: DEO), the world’s largest liquor and wine company.

It’s no secret that alcoholic beverage companies often make for good defensive plays in times of uncertainty. So what made Diageo stand out?

“It wasn’t a cultural thing, like tea versus coffee,” said Amy. “It was a currency thing.”

At the time, the British pound was near a 25-year low against the U.S. dollar, thanks to the greenback‘s safe-haven status during the global financial crisis.

Diageo was holding its own on the London Stock Exchange (having lost less than 1% in the previous six months). But on the New York Stock Exchange, where Diageo’s shares are traded as American depository receipts (ADRs), the British company was actually down 18% in the same period, after the conversion of British pounds into dollars was taken into account.

And when Amy saw signs that the flight to safety in the U.S. dollar was abating, she struck.

On the idea that a strengthening British pound would help propel an already solid performer, Amy bought Diageo in April 2009. Less than 14 months later, she cashed out for a total return (including dividends) of nearly 35%.
 
But I’m not here to pat Amy on the back about a trade she made years ago. I told you about this success because Amy’s found a surprisingly similar setup happening right now.

For her current Stock of the Month, Amy went shopping in France, home of the world’s second-largest liquor and wine company.

As in 2009, defensive stocks would seem to be a smart choice given the overall economic uncertainty around the world.

Like Diageo, this company’s products have strong brand recognition throughout the world. They include Absolut Vodka, Chivas Regal, Jameson Irish Whiskey, Beefeater Gin, Malibu Rum, and Kahlua.

But I doubt many people have heard of the parent company — Pernod Ricard SA (OTC: PDRDY). You can see from the ticker that its shares trade over the counter. But its some penny stock. Like Diageo, this is a major multi-national company.

One reason Amy likes the shares is because its brands sell very well in emerging markets, where they are seen as status symbols…

For instance, sales of Pernod Ricard’s Martell Cognac in Asia were up 26% during a nine-month period leading up to March 31 over the same period a year ago. Sales in Russia were up 29% and increased 26% in Ukraine. Revenues from Brazil rose 11%. In fact, emerging markets represented 77% of the company’s organic sales growth. And they have more room to run.

Consider that in 2010, imported brands of liquor only represented 1.3% of Russia’s market. This year, imports have accounted for only 1% of liquor sales in China. Right now, emerging markets account for 40% of Pernod Ricard’s sales. The company’s goal is to grow that to 50% within the next two or three years.

And also like Diageo in 2009, Pernod Ricard’s home currency is weak. In this case, it’s the euro, which just recently slumped to a new two-year low against the dollar. That’s actually great news for the company…

For nearly a year, the United States has been the cleanest shirt in the dirty laundry hamper. As a result, people have been more confident in the U.S. dollar than other world currencies. And when fear strikes the market, U.S. Treasuries are still the go-to safe haven for investors.

But there is a cost to being the best of the bunch. A strong dollar hurts U.S. exporters. For the rest of the world, U.S. goods have gotten a lot more expensive. On the other hand, foreign exporters — especially those that operate in euros — have a real edge.

There’s no doubt people will question the idea. Europe is viewed as toxic. But remember, Amy picked a defensive company for a reason. Alcohol usually does well, even during downturns.

Moreover, if you’re a Stock of the Month subscriber, you know Amy has made money going against the crowd before. Being a contrarian is what’s made her the biggest returns. She famously  bought shares of luxury jeweler Tiffany (NYSE: TIF) when U.S. unemployment was still 9.4%. But at the time, she saw clear signs the high-end shopper was alive and well. Her confirmation came when she closed out a nice double-digit return, which handily beat the market.

Action to Take –> I certainly think it helps her performance that Amy’s Stock of the Month makes investing as simple as it gets. She offers just one pick a month… and a real-money $100,000 portfolio of just her 12 favorite holdings. That keeps Amy focused on her best ideas.

And she’s not alone in this strategy. Few people realize that even with the billions of dollars at its disposal, Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) holds about 75% of its assets in just five stocks.

[Note: If you’d like to learn more about Amy — including her #1 stock for the next 12 months — then don’t miss this video presentation.

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