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Recession-Proof Stocks: How to Find the Outperformers

By May 21, 2020November 18th, 2022No Comments

To start, let’s take a look at some recession indicators and news. Then with that in mind, we’ll dive into the stocks that do well in a recession. Between December 2007 and June 2009, MCD stock delivered a total return of 2.5%, considerably higher than the 35% loss in the S&P 500.

Start with companies that tend to perform better than others in a downturn, and use that information to build a diversified portfolio. We believe everyone should be able to make financial decisions with confidence. The economy has historically always bounced back no matter how dark times appear. Even Warren Buffett has been investing in the company as the dividend continues to grow. McKesson is responsible for getting vaccines, medical supplies, and other products into the hands of medical professionals from manufacturers. This rally is partially because the company recently announced an agreement to extend its partnership with CVS to continue distributing pharmaceuticals through June of 2027.

  • “The era of cheap money, cheap labour and cheap energy is most likely over,” he warned.
  • The company generated strong earnings per share of $1.57, which popped by almost 30% sequentially and beat analyst expectations by 1.3%.
  • Examples include Coca-Cola, Johnson & Johnson, and Procter & Gamble.
  • We’d like to share more about how we work and what drives our day-to-day business.
  • Likewise, other consumer staples such as household and personal products tend to experience stable demand in recessions.

For investors, a lot of money can be made or lost during a recession. If you pick the right stocks there is a chance of seeing a big green number next to your portfolio, even in a deep downturn. In August 2008, Johnson and Johnson hit a high of $71.55 before dropping 33% to $47.97 in March 2009. Compare that to the Dow Jones, which hit a high of 14,066 on October 2007, and dropped 53% to 6623 in April 2009. Johnson and Johnson in effect outperformed the market by 20% and has outperformed in every recession in recent history, not to mention it includes an impressive dividend-growth track record.

Recession Indicators and News

That’s why I’ve put together this list of the best recession proof stocks. These investments should see less downside as the market continues to drop. And on top of that, these stocks keep paying their investors a steady stream of dividends.

recession proof stocks

With the price of energy going up globally, companies like Exxon Mobil and EQT stand to benefit for the foreseeable future. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. This video will help you get started and give you the confidence to make your first investment.

Nonetheless, the company reduced its dividend from 12 cents per share to 8 cents for the most recent quarter in the face of pandemic-related uncertainties. P&G pointed out in a February presentation that during the first half of its 2020 fiscal year, all eight of its operating segments posted positive organic sales growth. Its Skin & Personal Care and Personal Health Care businesses led the charge with 13% and 11% growth, respectively. Those include brands such as Gillette, Ivory, Pepto Bismol and Vicks.

Its intellectual property and relationship with physicians also contribute to its wide moat, says Morningstar’s Wang. Given all the talk of a U.S. recession—current or perhaps impending—investors may be thinking about adding some recession-resistant stocks to their portfolios. Another weight dragging on the price is its valuation remains extended, but not entirely out of bounds vs. the last three decades of trading action. You have to assume a weakening economy will keep Microsoft results lower than current analyst expectations, and an already rich valuation will bring another punk year for total investment returns. For an easy and secure way to invest in TIPs, recession-proof stocks and dividend stocks, consider Syfe Trade. You can buy your favourite stock with just US$1 and enjoy free monthly trades.

It often follows a somewhat predictable if irregular pattern known as the economic cycle. Periods of expansion can often last for years before hitting a peak. What follows is a period of contraction — a recession — before the economy enters a trough ahead of the next expansion. We’d like to share more about how we work and what drives our day-to-day business. Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams.

Amid high inflation and fear of recession, Walmart is a solid option for shoppers and investors. Walmart attracts customers looking for value, which makes it attractive amid a slowdown. Further, its increasing penetration financial reporting valuation of private brands indicates that Walmart has managed to defend its pricing gap with peers, which bodes well for growth. Value stocks and commercial real estate as potentially advantageous investments during downturns.

Strong Balance Sheets

The global consumer staples company – whose brands include Dove soap, Hellmann’s condiments, Axe personal care products and Breyers ice cream – grew revenues by 2.9%. The Home Care operating segment, which includes brands such as Cif and Sun, led that growth with a 6.1% bump in sales. We studied different industries that have the best odds of stable demand during an economic downturn and then selected the top players in these sectors. The firms were then briefly analyzed through their financials and market performance, following which they were ranked through hedge fund holdings courtesy of Insider Monkey’s Q survey of 895 funds. These stocks are defensive plays which can weather the current recession. Doing so can help your portfolio blunt some of the potential negative impacts of a recession.

In February, before the coronavirus took hold, Hormel’s guidance for fiscal 2020 were net sales of at least $9.5 billion and EPS of $1.69. Refrigerated Products, its Jennie-O Turkey Store and Grocery Products were expected to lead the way. During the Great Recession, Hormel’s results were mixed, as consumers balked at some of its more upscale forex technical analysis software products. Paul Polman, who was CEO of Unilever during the Great Recession, found the company’s business ideally suited to fight off a recession. General Mills – which is responsible for numerous big brands including Cheerios, Pillsbury, Totino’s, Betty Crocker, Yoplait and Annie’s Homegrown – did just fine during the Great Recession.

recession proof stocks

This natural gas producer is looking to make record profits this year as the U.S. becomes the largest exporter of natural gas. When there’s so much overall uncertainty and volatility in the market, investors look to cash out regardless of how well companies perform, even when companies meet or exceed expectations. Nearly a year after my Sell call on Microsoft, I am still quite concerned about its valuation, which remains extended for a “slowing” growth selection. In addition, free cash flow generation of 3% does not come close to matching 8.5% CPI over the past 12 months. Outside of its early days of super-high growth in the 1980s and 1990s, Microsoft has NEVER been this expensive vs. cost-of-living changes.

Top Biotech Stocks To Watch In Q4 2020

Take a look at’s Inflation Kit, and protect your investments from dropping in value so that you don’t have to worry about checking the market report daily. These stocks haven’t been winners yet in 2022, but we wanted to list them because they’re in recession-proof industries. The company has a wide inventory of drilling locations that will help them continue to increase revenue. With the sanctions that have been imposed on Russia when it comes to natural gas, EQT will likely continue to be a winner.

recession proof stocks

“It costs a quarter of a million dollars to raise a child, so laid-off couples might have been extra-scrupulous with their birth control between 2008 and 2011.” But Philip Morris has been working to counter the anti-smoking trend by replacing cigarettes with smoke-free products, such as its IQOS electronic device that heats tobacco instead of burning it. PM also claims IQOS reduces the levels of harmful chemicals ingested compared to cigarettes. The company says roughly 9.7 million people “have already stopped smoking and switched to IQOS.” “The consumer shift is toward strong brands with strong credentials and strong heritage.” Its U.S. business improved despite the country being in the midst of a recession.

What Stocks Do Best in a Recession?

There are certain things that consumers will continue to buy regardless of their economic situation. And some consumer staples companies benefit from the forex trading vocabulary tendency for people to eat at home rather than go out to restaurants. These two consumer staples stocks are well positioned in the event of a recession.

Should we go through an extended recession as a result of COVID-19, Hershey might bring out the same playbook. As a result, HSY might catch up from its current underperformance during this bear market. Yes, HSY shares lost 6%, including dividends, during the Great Recession.

The stock has gained marginally over the past year to close the last trading session at $42.91. TIPs – Treasury inflation-protected securities – are another inflation hedge to consider. They’re bonds issued by the US government that protect your money from inflation. When inflation rises, the principal value of your bond increases and you receive a higher interest payment from your bond.


Author Nahue

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