5 Stocks to Trade in a Recession
There’s no getting away from it, the next recession is overdue. But it doesn’t have to be all doom and gloom. Read on to find out 5 of the best stocks to trade during recessions. Stick around and we’ll even let you know what fundamental events are worth checking out this week — ‘cos we’re nice like that.
Recession-defying stocks
The following stocks have shown a remarkable ability to defy gravity (and market sentiment) during economic uncertainty. Nothing is a sure bet, of course, past performance doesn’t guarantee anything, but these stocks have all been there, done it and got the t-shirt, so each are worth a look as the threat of the next recession looms large.
#1 Walmart (WMT)
The undisputed king of recession-proof stocks, US multinational retail corporation Walmart has demonstrated great pedigree. During the last recession, Walmart was the only stock in the Dow Jones Industrial Average index to post a positive return between the beginning and end of that bear market.
It also recovered all losses in the March 2020 Covid-19 mass sell-off in just a couple of weeks, posting an all-time high (at the time) in April of that year.
Why Walmart?
As a retailer, Walmart’s produce is always in demand. Essential items at affordable prices are always a winner, especially during a recession.
Price on 01.01.2022: 144.65 USD
Price on 22.08: 131.60 USD
% change YTD: -9.44%
Source: Google
#2 McDonald’s (MCD)
McDonald’s was one of the best-performing blue chip businesses in the last recession. In 2008 it posted an adjusted earnings-per-share of $3.67, a whopping 26% increase YoY. The company also performed very well during the darkest days of the Covid-19 pandemic.
Why McDonald’s?
Similar to Walmart, when the economy nosedives, people care less about quality and more about price. McDonald’s is all about low-quality, low-price. But let’s also be honest — who doesn’t love a trip to The Golden Arches?
Price on 01.01.2022: 268.58 USD
Price on 22.08: 256.96 USD
% change YTD: -4.42%
Source: Google
#3 Pfizer (PFE)
Big Pharma heavyweight Pfizer performed well in 2020 and climbed to lofty new heights in 2021. Interestingly, that wasn’t only down to Covid-19 vaccine production. The company has been performing much better than its peers since 2009.
Why Pfizer?
As with many on this list, the products that Pfizer produces are in constant demand, regardless of the market situation. That translates well on its stock price.
Price on 01.01.2022: 56.65 USD
Price on 22.08: 46.82 USD
% change YTD: -19.0%
Source: Google
#4 Procter & Gamble (PG)
P&G is one of the world’s largest consumer product companies, with $80m in annual revenues.
The company didn’t have the best organic growth during the last recession, but since then it has trimmed its waistband of some of the smaller brands in its portfolio. This proved to be very effective at weathering the Covid storm.
Why Proctor and Gamble?
No matter how well or poorly the global economy is performing, people need access to cleaning products, soap, nappies, shaving razors and other everyday goods. As P&G has many of the world’s top consumer brands in its portfolio, it presents a good option in a recession.
Price on 01.01.2022: 162.90 USD
Price on 22.08: 142.29 USD
% change YTD: -13.50%
Source: Google
#5 Kraft Heinz
In 2012, Kraft split its business, which resulted in the formation of the new Mondelez International Inc. confectionery and drinks offshoot. Then a merger with Heinz soon followed.
Like Walmart, Kraft Heinz stock took just one month to regain its losses from the March 2020 sell-off, so it’s easily shown a resilience to market pressure.
Why Kraft Heinz?
The company is the McDonald’s of the packaged food industry, producing affordable pre-packaged goods like soups, and a certain popular flavour of sauce. Continued high-demand for its goods means that Kraft Heinz is a decent option for investors in a recession. It’s also having a good year…
Price on 01.01.2022: 36.14 USD
Price on 22.08: 38.11 USD
% change YTD: +5.30%
Source: Google
What do you think?
Which stocks are you investing in ahead of the recession? Let us know by tweeting us at @_contentworks.
Top trading events this week
It’s going to be a relatively busy week. Here’s everything you need to know.
Monday
No major events.
Tuesday
● EUR — German Inflation Rate YoY Prel (AUG)
● USD — CB Consumer Confidence (AUG)
Wednesday
● CNY — NBS Manufacturing PMI (AUG)
● EUR — German Unemployment Change (AUG); Unemployment Rate (AUG)
● EUR — Core Inflation Rate YoY Flash (AUG)
● CAD — GDP Growth Rate Annualised (Q2); GDP Growth Rate QoQ (Q2)
Thursday
● USD — ISM Manufacturing PMI (AUG)
Friday
● USD — Non-Farm Payrolls (AUG); Unemployment Rate (AUG)
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Speak soon!
The Contentworks team
