Examples and Characteristics of Recession-Proof Industries

Examples and Characteristics of Recession-Proof Industries

noviembre 20, 2020 Forex Trading 0

To see all exchange delays and terms of use, please see disclaimer. WM’s strong performance and bright prospects have earned it an overall POWR Rating of A, which translates to a Strong Buy in our proprietary rating system. IMKTA) to brace your portfolio for the potential recession ahead. Singapore investors can easily purchase TIPs through exchange-traded funds such as the Vanguard Short-Term Inflation-Protected Securities ETF . “The era of cheap money, cheap labour and cheap energy is most likely over,” he warned.

Philip Morris – and most other major cigarette companies, for that matter – benefited from increased sales during the Great Recession. But ultimately, alcohol distributors need the volume business from fervo energy stock price restaurants and bars to get by, and we’ve seen signs of that as the economy has begun to reopen. Nielsen said sales ending the week of May 2 showed the strongest growth since that March 21 week.

Below is a graph comparing free cash flow generation vs. YoY CPI inflation since 1990. Notice the superb buying opportunity at 13% free cash flow yields in late 2012. For the second quarter of the fiscal year 2022 ended June 30, WM’s revenue increased 12.3% year-over-year to $5.03 billion. During the same period, the company’s adjusted operating income increased 11.6% year-over-year to $907 million, while its adjusted net income increased 11.3% year-over-year to $599 million.

recession proof stocks

At the end of the day, we’re all just trying to predict what will happen next based on the information we have. This is why Q.ai uses artificial intelligence to scours the markets for the best investments for all manner of risk tolerances and economic situations. Better still, you can activate Portfolio Protection at any time to protect your gains and reduce your losses. The hottest stocks in recent years have been in the technology and communications industries. Many investors found it easy to build a portfolio that skewed toward these growth-focused sectors by buying stocks related to megatrends such as 5G,streaming services,cloud computing, and social media. Because of that, investors should construct truly diversified portfolios to weather the downturns.

On September 22, PFE announced a cash dividend of $0.40 per common stock for the fourth quarter, payable on December 5, 2022. The company’s $1.60 per share forward annual dividend translates to a 3.73% yield at the current price. Its dividends have grown at a CAGR of 5.7% over the past three years and 5.9% over the past five years.

Top 25 Best-Performing Stocks: November 2022

Learn more about dividend stocks, including information about important dividend dates, the advantages of dividend stocks, dividend yield, and much more in our financial education center. Private Equity funds favoring reliable, cash generative defensive stocks, and taking them off public markets. All companies strive for growth and strong earnings, no matter what conditions their underlying economies are under. Yet some fail, due to being naive about their true customer loyalty, product/service positioning, and/or a failure to comprehend the contagion that can seep in from elsewhere. Three-quarters of companies experience a revenue decline during a recession, yet 14% actually experience revenue and profitability growth. For what seems like an endless Groundhog Day-like existence, we have heard on the news that a recession is imminent.

recession proof stocks

Put simply, the company offers shopping opportunities in both retail stores and through e-commerce and provides access to its other service offerings. Moreover, the company often promotes its services at everyday low prices to attract the interest of consumers. Elsewhere, its International segment includes various formats that include supercenters, supermarkets, hypermarkets, and e-commerce entities.

Although they have been pressured by rising interest rates in 2022, REITs are a natural inflation hedge since property rents rise as general prices rise. Looking ahead, S-REITs look set to continue benefiting from Singapore’s reopening as well as long-term structural trends. Discover dividend stocks matching your investment objectives with our advanced screening tools. Schedule monthly income from dividend stocks with a monthly payment frequency.

Argentina is blighted by inflation; you see businesses spend every dollar on quality inventory to build up huge runways as an inflation edge. Johnson & Johnson has a solid balance sheet with $34 billion in cash and marketable securities in addition to $32 billion in total debt, which leaves a net cash position of $2 billion. Moving forward, management plans to execute its capital allocation strategy of mergers and acquisitions while returning cash to shareholders with buybacks and dividends. The company has a forward dividend yield of 2.74%, which has grown consistently over the past 59 years. In the third quarter, net income increased to $4.5 billion, up a rapid 21.6% from the $3.7 billion generated in the equivalent quarter last year.

What industries are recession-proof?

The downside case results in a price target $75, in the case that can sales fall. Fast-growing optical vision company National Vision has a recession-experienced management team and a balance sheet that proves EYE can be financially responsible during an economic downturn. Jefferies analysts add that optical is a largely cost-efficient sector, while the value of its products is high and medically necessary.

  • This means investors are willing to lock up money for 10 years at a lower rate than for 2 years at a higher rate.
  • The companies that supply these products are in the consumer staples sector.
  • Walmart alone employs over 2 million people and offers practically every product category imaginable in the consumer goods segment.

Sanofi stock is about 32% undervalued, according to our metrics. The drugmaker maintains a wide lineup of branded drugs and vaccines—including immunology drug Dupixent—as well as a robust pipeline. Growth of existing products and new product launches should offset upcoming patent losses, argues Morningstar’s Conover. The textbook definition of an economic recession is two consecutive quarters of decline in gross domestic product, which we’ve experienced in 2022. However, other economic indicators that often fall during recession—including employment growth—have trended up so far this year.

“While a recession isn’t here yet, growth is slowing,” says Morningstar’s head of U.S. economics Preston Caldwell. Morningstar has pulled back its near-term GDP forecasts to 1.6% in 2022 and 1.0% in 2023 and expects growth to rebound in 2024. It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Stockmarket.com and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website. I have no business relationship with any company whose stock is mentioned in this article. The stock has gained 3.3% over the past month and 32% over the past year to close the last trading session at $86.17.

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Patents, economies of scale, and a powerful distribution network support the drugmaker’s wide economic moat rating, argues Morningstar’s Conover. In addition, recession-proof companies tend to be financially healthy and highly profitable—two qualities that are prized when economic times get tough. Such companies often have competitive advantages that allow them to maintain reliable cash flows over time, regardless of what’s going on in the economy. That’s not to say Microsoft is a risk-free investment idea during a once every decade recession. Under a worst-case economic contraction scenario into 2023, I can model price selling under $200.

Recession-proof industries either provide an absolute necessity that consumers will always keep purchasing, or have characteristics that are conducive to experiencing increased demand in downturns. Johnson & Johnson has a price-earnings ratio of 6.4, which is 10% cheaper than the health care sector mean. In addition, this is 3% cheaper than its five-year average price-earnings ratio. Many of these companies see an increase in demand when consumers cut back on more expensive goods or brands or seek relief and security from fear and uncertainty. Speculative stocks are richly valued based on optimism among the shareholder base.

Unilever has focused on global brands it believes can be juiced for even more sales. As a result, it has undertaken a strategic review of its tea business, which could be sold in 2020. In fact, Powell raised the company’s earnings guidance for 2009 by 4 cents per share to $3.87. It finished fiscal 2009 with $3.98 in EPS, 11 cents higher than its guidance for the year.

recession proof stocks

This helps to maintain your purchasing power during periods of high inflation. For retail and hospitality REITs, a rebound in visitor arrivals could provide a boost. In the first half of 2022, Singapore registered 1.5 million visitor arrivals, nearly 12 times narrative and numbers the value of stories in business more compared to the same period last year. Even in a recession, if you pick the right stocks, there is a chance of seeing a nice profit. Certain financial information included in Dividend.com is proprietary to Mergent, Inc. («Mergent») Copyright © 2014.

To see all exchange delays and terms of use please see Barchart’s disclaimer. As further evidence of this, the company recently announced the launch of its InHome Delivery Service. This new service allows the company to deliver groceries straight to a customer’s refrigerator. And it allows the company to have a tiered membership plan inside of Walmart+. The basic plan is now $12.95 a month and the add-on service costs an additional $7 month. Learn more about GuruFocus’ key features, including All-In-One Screener, backtesting, 30-year financial, stock summary page, guru trades, insider trades, excel Add-in, google sheets and much more.

What is the Prediction for Walmart Stock?

The good news is that even though the stock market is down, it doesn’t mean that every company is suffering. The bad news is that we can’t guarantee the stocks we listed or the industries we mentioned will continue to increase in value. A report from Placer.ai that was released in October 2022 outlined that dollar stores are seeing greater foot traffic and revenues as inflation pushes customers down from traditional superstores such as Walmart.

They reduce spending on things like travel, restaurants, and leisure services. Because of this, cyclical stocks in these industries tend to suffer, making them less attractive investments for investors during a recession. It’s not looking good, but there are many companies that do better than others during a recession. The top limefx tend to be in industries that continue to produce steady cashflows even in downturns. These are companies that produce consumer staples or necessities. Church & Dwight actually improved its earnings per share between 2007 and 2009 by consumers with value pricing at a time when they could really use a break.

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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. Speculative asset prices are often fueled by the market bubbles that form during an economic boom—and go bust when the bubbles pop. While these companies are struggling to make their debt payments, they are also faced with a decrease in revenue brought about by the recession. The likelihood of bankruptcy is higher for such companies than those with lower debt loads.