Recession-Proof Stocks: Best Stocks to Buy During a Recession

During 2008, Hormel’s stock lost almost 22% of its value, which is still considerably better than the market. Following the recession, Hormel has put up positive returns in nine of the past 10 years. In fiscal 2019, Brown-Forman’s revenues grew 2% on a reported basis, with tariffs lowering sales by one percentage point. However, even though a protracted trade war would continue to act as a big headwind to the company’s sales in Europe, it still expects fiscal 2020 results to be healthy.

Invest in up to 20 stocks and ETFs by adding a single Kit to your portfolio. Our AI will rebalance your investments on a weekly basis to optimize performance. All you have to do is build a portfolio of Kits and leave the rest of portfolio management to AI.Download Q.ai today to start investing. Not only do dividend stocks reward investors simply for holding them, but they also tend to be recession-proof. Dividend payers often have a long history of rewarding investors even in economic downturns, and they're usually profitable unlike a number of growth stocks these days. In the future, I anticipate a decrease in Rubis’ growth rate.

In a recession, the fundamentally strongest companies in every sector will emerge stronger. Once the dust settles, many of their weaker competitors will be either out of business or may be willing to be acquired. This is because people reduce their spending by looking for cheaper options. Thus, during a recession, they tend to make purchases at discount retailers almost by default.

While some scenarios about how the national debt can affect your wallet might be speculative, anything is possible if borrowing 10 qualities of a successful entrepreneurs to accelerate. Shop Pay is an innovative payment solution developed by Shopify. It’s an app that people can use just like a regular wallet to store their card details and information. On the date of publication, Ian Bezek held a long position in HRL, BF.A and MMM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Healthcare

In some cases, as in 2008, the benchmark indices can fall by 50 per cent or more. A significant percentage of the working population either lose their jobs, have to take a pay cut, or see their salaries stagnate. These are listed companies whose chare prices are not badly affected during a recession. Value stocks and commercial real estate as potentially advantageous investments during downturns. Protecting your investments against downturns, while still maximizing gains, requires a thoughtfully constructed portfolio that’s ready for anything, even a recession. There are certain companies in any sector that make sense to invest in now, Wyrick says.

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. Recession proof refers to assets, companies, industries, or other entities that do not decline in value during a recession or decline less than the broader market.

To learn more about our rating and review methodology and editorial process, check out our guide on how Forbes Advisor rates investing products. The company has been growing its earnings at a rate of 6.5% per year for the last five years, and analysts expect this rate of growth to be sustained over the next five years. PepsiCo is the only stock on the best recession stocks list that has slightly underperformed the S&P 500 over the last decade. PepsiCo has averaged 12.1% annual gains, while the SPDR S&P 500 ETF has averaged 12.6%.

Other stocks to consider in a recession

Morningstar expects first-half economic growth to hover near zero, with a full-year gross domestic product forecast for 2023 of 1%. However, Morningstar thinks economic growth will bounce back in 2024 as the Federal Reserve eases monetary policy. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns.

The company says roughly 13.5 million people “have already stopped smoking and switched to IQOS.” The U.S. might not be in a recession at the moment, but expectations are high that one could hit in 2023. These are the best recession-proof stocks for investors to consider.

Is it possible to find recession proof stocks? Yes it is. Here's how…

PepsiCo's profits are insulated from rising interest rates as well since the company maintains low leverage and earns an A+ credit rating. Coupled with a healthy A- credit rating and no need to raise equity capital to fund its spending plans through 2026, WEC Energy appears poised to weather a recession and come out stronger on the other side. Increased fuel efficiency and a shift to electric vehicles could weigh on long-term demand for gasoline. But investors who share our belief that this transition will take place over many years or decades may still find Magellan's overall risk profile and status as a top high dividend stock attractive. Coupled with Magellan's modest capital spending needs , the partnership has historically managed to offset higher operating expenses with price increases to protect cash flow. Approximately 30% of the firm's refined products markets charge regulated tariff rates that track the producer price index for finished goods.

• Hormel would rather sell the No. 1 guacamole, canned chili or organic deli meat rather than be one of many makers of a more competitive product like cereal or chips.
• Thus, during a recession, they tend to make purchases at discount retailers almost by default.
• These other industries might not come to mind right away, but overlook them at your peril.
• Synopsys Inc is a company that sells electronic design automation software and services.
• But the point stands – should an economic downturn materialize, PG ranks among the stocks that outperform in a recession.

The idea behind that move is to launch in-store clinics, which makes sense, but it will be expensive to get those set up. Walgreens reported an adjusted operating loss of $159 million from the healthcare segment in the second quarter. Unlike its two peers above that compete in the industrial and telecom segments, the pharmacy business is generally considered recession-proof. If you're looking for blue-chip dividend stocks to buy, a great place to start is the Dow Jones Industrial Average.

Recession-Proof Stock #3: Colgate

For beverage manufacturers with in-demand products, like Coca-Cola, the more robust and diverse their portfolios, the more leverage they have when negotiating pricing, shelf space, and in-store promotions. Demand for Kimberly-Clark's products remains fairly stable during recessions because there is not much discretionary use in categories such as diapers and toilet paper. While more consumers trade down when times get tough, Kimberly-Clark plays across all pricing tiers with value and premium offerings. High inflation does create a challenge given the number of raw materials PepsiCo needs to make its food and beverages. But the firm's strong brands and dominant shelf space with retailers have helped PepsiCo raise prices to protect its margins and continue growing earnings.

• Compared to enterprises in the regulated utility space, DUK ranks better than 76.56% of its rivals.
• Since the third quarter of 1990 was the second consecutive quarter of negative GDP, the economy was in a recession as of July 1990.
• It will also keep you invested in the market, so you don't have to worry as much about picking the bottom and then re-investing.
• Based on that, the U.S. is not currently in a recession, with fourth-quarter gross domestic product data showing the economy grew at a 2.9% annualized rate in the final three months of 2022.

Colgate mitigates this risk by having products available at all price points and in different package sizes to meet a wide variety of consumer needs. Magellan's BBB+ credit rating insulates the firm's cash flow from rising interest rates as well. An investment-grade rating has given Magellan access to debt capital with attractive fixed rates and long, well-laddered maturities.

Oil prices have fallen below this threshold and might in the next downturn. But Chevron maintains ample balance sheet capacity so it can borrow debt to plug its cash flow deficit and defend its dividend until the pricing environment recovers. Coupled with Duke's BBB+ credit rating, the firm should continue growing its earnings and defending its track record of paying safe dividends since 1927. Overall, PepsiCo is one of the best recession-proof stocks in the market and appears positioned to extend its streak of paying higher dividends every year since 1971 regardless of the economic environment.

He said that some believe the 30 companies in the Dow are vulnerable to recession. However, the report said that inflation in Europe would take some time to recede. So far this year, however, NEE hasn’t performed that well, which may fuel criticism. Nevertheless, investors should consider NEE as one of the stocks that outperform in a recession because of its proven performance. Further, the company tends to do whatever it can to stay open during natural disasters. But in times of duress, it almost acts as part of the governmental infrastructure.

Last month, sales at U.S. retailers declined 0.6% compared to the prior month, its biggest decline in 2022, per the Commerce Department. At the same time, the Federal Reserve Bank of Philadelphia said that manufacturing activity in its region contracted more than anticipated. All this makes IAU an ideal way to play the yellow metal if you’re just looking for protection during a short-lived economic downturn. You could buy physical gold – though that would require also having somewhere to safely store the gold, insuring it, then finding someone to buy it when you’re done. Or you could just buy shares in one of several gold ETFs that represent physical bullion held elsewhere. Gold bulls have been rewarded recently, with recession fears driving gold prices to levels not seen in at least five years.

Performance information may have changed since the time of publication. It offers a very modest dividend yield of 0.4%, but it has the second highest average dividend growth rate of 12.3%. Where Thermo Fisher Scientific excels is its stock performance. TMO is the best-performing recession stock on our list, outperforming all the others.

Surprising recession-proof industries

Using multiple https://1investing.in/ points gives you a better understanding of where the economy is going. It is vital to remember the stock market is always forward-looking, trying to price in what will happen within the economy 6 to 12 months down the road. Remember that even a modest gain is a win for your portfolio when the overall market is down. How would you feel if your account gained 1% for the quarter, even as the overall market was down 4%? While a 1% gain may not seem like much, it shows your investments are still positively performing even during a recession.

You are never fully insulated from all risks or losses, but having a mindful strategy can make a big impact on your accounts. To get the clearest sense of your investment’s performance, you should benchmark that data against an appropriate index with similar risk characteristics and holdings. Warning bells for recession started ringing in 2022 and they haven’t stopped since. As if investors weren’t already spooked enough, a fresh warning comes straight from the horse’s mouth. The head of the IMF believes that in 2023, one-third of the world economy would be in recession.

The aftershocks of the coronavirus pandemic are still being felt all over the globe. The virus saw industrial output collapse and led to widespread layoffs and income loss. This in turn motivated central banks to reduce interest rates to stimulate economic activity and give out cash assistance to help families navigate the tough economic environment. It’s been a busy week with a flurry of new economic data sets to give investors more of an idea of what the Fed might be thinking about interest rates.

You can learn more about GOBankingRates’ processes and standards in our editorial policy. Data was compiled on Oct. 19, 2022, and is subject to change. Information on analyst ratings was sourced from Yahoo Finance.