Check out these stocks that are set to outperform the recession
If the market is indeed a forward process, investors must take note of the fact that recession-proof stocks have shown serious strength in recent trading sessions. These are companies that operate in industries such as consumer-oriented and utilities, which are known to hold up well during economic downturns. They can also provide investors with reliable earnings, secured balance sheets and dividends, which are highly attractive qualities in a market full of uncertainty.
With the Federal Reserve tightening its monetary policy to combat inflation and the widespread volatility of equity markets, of course, a recession is likely to be on the horizon. Michael Hartnett, chief investment strategist at Bank of America, recently wrote to clients that a “recession shock” could come, which certainly doesn’t seem like a good thing for many areas of the market. So it may be a good idea to focus on investing in companies that have a reputation for being resilient in a weak economy, especially since these stocks are seeing such strong demand from buyers at this time.
Without further ado, here are 3 great recession-proof stocks to buy:
Walmart may be the only recession-proof stock, and after nearly a full year of consolidation the shares have reached new all-time highs, a must keep in mind. As the world’s largest retailer, this business has a lot to offer investors Walmart operates a chain of more than 11,000 discount department stores, wholesale clubs, supermarkets and supercenters that will see steady sales during the recession because consumers want to save money on their daily purchases. The company is also investing heavily in its omnichannel retail experience, which should pay off in a big way over the years.
Investors should keep in mind that Walmart recently posted a Q4-compliant EPS of 3 1.53, up 10% year-over-year, and indicated a 4% -plus sales increase for next year, another reason to consider adding shares. After all, Walmart has a highly reliable history of dividend growth and is a dividend elite, which tells investors that they can rely on the company to help them generate revenue year after year. The stock currently pays a 1.43% dividend and is a great buy-the-dip candidate to consider moving forward.
Johnson & Johnson (NYSE: JNJ)
The healthcare sector is another great place to look for recession-proof stocks, as these companies see steady demand for their products regardless of what is happening in the economy. Johnson & Johnson stands out as one of the top options in the sector due to its blue-chip status, dividend aristocrat status and strong year-to-date outperformance of the S&P 500 vs. It is a leading company in the pharmaceutical, medical devices and global consumer healthcare product industry and is a company that is clearly in favor of investors at the moment. The company generates most of its revenue from its pharmaceutical segment, which offers an excellent combination with a powerful pharmaceutical pipeline of best-selling drugs such as Stellara and Imbruvika.
If one of the company’s future drugs is successful, it could mean huge revenue growth on the horizon, a big reason why such biopharma stocks are so attractive. Hospital visits and elective surgeries should also be increasing for the effects of epidemic reduction, which is another positive for Johnson & Johnson going forward. In Q4, the company’s total sales grew 10.4% year-over-year to about 25 billion, which means better results could be on the horizon for this recession-proof stock.
Procter & Gamble Co (NYSE: PG)
Think about everyday household items, personal care, and food and paper products. These are the items that every single consumer in the world must buy consistently, which is why a stock like Procter & Gamble is so attractive. It is a consumer staple company that has created big brands like Tide, Gillette, Pampers, Bounty, Crest, Ivory, Oral-B, Tampax, Charmin and many more. As the company’s products benefit from volatile demand, investors can rely on Procter & Gamble to make decent earnings even in a recession. More importantly, it is a company that will be able to pay its dividends in almost any economic cycle.
Procter & Gamble has been benefiting from the epidemic in recent quarters as more consumers bought cleaning products, while the company posted the 14th quarter of mid-single-digit revenue growth last February. With a 2.19% dividend yield and a diversified operating model, this is probably the strongest consumer main stock on the market to consider adding at this time.
Walmart is part of the Entrepreneur Index, which tracks some of the largest publicly traded companies founded and operated by entrepreneurs.