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Good morning,
Stocks are easy to buy in a bull market. That was particularly true after 2008, when interest rates were at historically low levels. When stocks are the only game in town for investors seeking alpha, many investors are willing to play the game.
But since 2022, many investors are experiencing market conditions that they haven’t experienced yet. Interest rates have shot up at a historically high pace. And with the Fed pledging to keep rates higher for longer, many investors are nervous about the “r” word, recession.
While recessions sound scary, economists will acknowledge that they are regular events. In fact, since World War II, there have been 13 recessions. And if you go back to 1900 the number increases to 23.
That means there’s a playbook for investing in a recession. And that involves finding stocks that are recession proof.
What do we mean by that? We mean companies that have products and services that are in demand no matter what’s going on in the economy.
And in this special presentation, we’ve identified seven stocks that fit the category of “recession-proof.”
But that’s not the only trait these stocks share. Each of the stocks on this list are low beta stocks. That means they aren’t as volatile as many stocks in the market. During a bull market, these stocks may be considered too boring. However, when the economy is in a downturn, these will typically be shining stars in your portfolio.
When you know where to look, recessions don’t have to be scary. And knowing the companies that are likely to perform well during a recession is a good place to start.
View the 7 Recession-Proof Stocks That Also Offer Strong Value
The Early Bird Team
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Recession-proof stocks, often referred to as defensive stocks, are shares of companies that tend to be less sensitive to economic downturns. These companies typically operate in industries like healthcare, utilities, consumer staples, and essential services, which maintain demand even during economic contractions. Investors favor recession-proof stocks because they are considered more resilient to the negative impact of economic recessions. In contrast, a recession can significantly affect most stocks. During economic downturns, consumer spending, corporate profits, and overall market sentiment can decline, causing broad market indices to suffer. This can lead to reduced revenues and profitability for companies across various sectors, including a decline in stock prices. However, while defensive stocks are less affected, they are not entirely immune, as the severity and duration of a recession, as well as specific company characteristics, still play a significant role in determining their performance.
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