Recession-Proof Stocks: What You Need to Look For The Motley Fool
The shaded bars show past recessions and if this pattern continues, another recession is on the horizon. This metric currently sits at one of the lower numbers we’ve seen, at -0.42%. And to get that number, it’s the 10-year treasury rate minus the 2-year treasury rate. Today, we dive into three stocks that are poised to beat inflation and rise above any possible recession. All three names appear worth buying for the second half of 2022 and might be up for consideration as buy-and-hold stocks. Recessions and economic ebbs and flows are part of life, and they impact some industries and sectors more.
Similarly, the MedTech segment is experiencing impressive operational growth, particularly in electrophysiology and orthopedics. The company’s medical devices, including robotic-assisted surgery systems and innovative catheters, are well-received in the market. Johnson & Johnson’s efforts to improve the growth of this segment have shown success, with operational sales growth of 14.7% YoY.
Another industrials player Benkendorf likes is Copart (CPRT), the “number one” player in auto salvage and salvage auctions in the US. This industry is also very consolidated due to its high barriers to entry, as it’s difficult for companies what is american depositary receipt to acquire junkyards, he explained. Stocks have fared poorly in 2022, but unlike other investors, Matthew Benkendorf isn’t worried. Our experts picked 7 Zacks Rank #1 Strong Buy stocks with the best chance to skyrocket within the next days.
Advisors also point to value stocks and commercial real estate as potentially advantageous investments during downturns. Merck has seen steady growth over the last decade, and analysts expect that growth to continue. On the one hand, their top line has slowed because their former top drug, Embrel, has seen its revenue slow. However, the drug is still on pace to generate $4.2 billion in sales in 2018. Furthermore, Amgen projects that it will maintain exclusivity with Embrel through 2029. The company also has released a new migraine drug, Aimovig, which they are hoping will buoy the top line.
Diversified portfolios better withstand recessions
Moving forward, CAG should easily be one of the best recession-proof stocks to buy right now. As you’ve likely heard, consumer sentiment recently dropped to multi-year lows. This implies, among other things, that households are tightening their budgets toward discretionary (as in unnecessary) purchases.
- AbbVie stock is up 11% in 2022, and it’s slipped to potentially more attractive price points off its April peaks.
- Roughly 75% of funeral home clients who pay for funeral arrangements ahead of time pay a lump sum.
- General Mills (GIS) is one of those stocks that can be owned in good times and bad.
- Finally, it’s not just self-anointed gurus on YouTube that are sounding the alarm on an economic downturn.
- PepsiCo is one of the world’s largest beverage and snack companies.
- There’s no reason to believe that McDonald’s won’t enjoy a similar performance whenever the next recession hits.
These customers represent the true believers of the brand and it’s where the company expects its growth to come from. It’s hard not to love a stock that’s quadrupled in value over the last decade. Still, Dollar Tree (DLTR) has been taking it on the chin lately.
Dollar Tree operates over 15,500 stores across much of the U.S. and Canada. The discount retailer late last year raised its prices for the first time in history from $1 to $1.25, and it completed its new pricing rollout a few months ahead of schedule. The higher prices allow Dollar Tree to sell a wider range of merchandise, while maintaining some of the forex trading tools lowest prices in retail, fighting back against inflation, and improving margins. In the retailer’s third quarter, its grocery business saw double-digit year-over-year comparable sales growth. WMT also saw an increase in food units sold in the third quarter. Overall, U.S. same-store sales in Q3 rose 8.2%, and were up 17.4% on a two-year stacked basis.
A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he’s a keen student of business history. Married and now living in Halifax, Nova Scotia, he’s also got an interest in equity and debt crowdfunding.
Recession-Proof Stocks: Aflac (AFL)
As previously noted, consumers tend to eliminate extra costs during recessions, which can affect streaming services and other entertainment options. The hottest stocks in recent years have been in the technology and communications industries. Stock market corrections and bear markets commonly occur during the contraction phase. Cyclical stocks — companies in industries highly sensitive to the economic cycle — are often the hardest hit during a recession. In the consumer space, Coca-Cola and PepsiCo look like good bets.
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This dedication to giving investors a trading advantage led to the creation of our proven Zacks Rank stock-rating system. Since 1988 it has more than doubled the S&P 500 with an average gain of +24.17% per year. These returns cover a period from January 1, 1988 through September 4, 2023. Zacks Rank stock-rating system returns are computed monthly based on the beginning of the month and end of the month Zacks Rank stock prices plus any dividends received during that particular month.
Many investors will diversify and include recession proof stocks in their portfolios to try to safeguard returns during an economic slowdown. However, this will depend on their investing goals, risk tolerance, and portfolio composition. Lastly, the company’s pharmaceutical and MedTech pipelines will be significant growth drivers in the coming years.
“You can’t just operate as two camps if you want to be successful.” ABBV has outpaced the market and more than doubled its industry since it began trading in early 2013, up 335%. The stock has climbed 50% in the last two years and 28% in the trailing 12 months vs. Large Cap Pharma’s 16%. AbbVie stock is up 11% in 2022, and it’s slipped to potentially more attractive price points off its April peaks.
Other stocks to consider in a recession
This is largely because Hormel focuses on owning its categories rather than being one of many brands selling a commodity good. CL stock has backed Ev stocks to watch off 15% from the highs given these developments. Analysts see earnings recovering and CL stock is trading at just 20x those projected earnings.
In the company’s fiscal Q conference call, Chief Financial Officer Richard Galanti said that an increase in the Costco membership cost was coming. It was just a matter of time, although he said the retailer is prepared to wait several months before doing so. Early in January, CEO Chris Kempczinski issued a company-wide memo outlining changes coming to the Golden Arches, including job cuts.