When we enter a period of economic uncertainty, the phrase "recession-proof stocks" is tossed about, but really the only certainty is that recession-proof stocks do not exist.
On the other hand, recession-resistant companies are what a savvy investor searches for during the absence of a bull market, as we are now.
Historically, cyclical sectors such as financial and consumer directories have outperformed during bull markets. These equities are frequently susceptible to interest rates and economic growth, so they perform worse than others during a bear market or imminent recession.
Consumer preferences shift from optional and luxury purchases to essential home products and services during a recession as individuals are more concerned with their bottom line.
During uncertain periods such as this, the smart money rotates into recession-resistant or defensive sectors like Consumer Staples, Utilities and Health Care, all of which historically perform well during a recession.
Energy (+49.17%) is the sector with the most significant returns this year, owing to rising oil prices, supply-chain concerns, and demand for gas, energy equipment, and services while the war in Ukraine continues.
This bear market is different. Year-to-date, the returns for the following sectors are:
Consumer Staples: -0.62%
Health Care: -8.1%
On the surface, these sectors could look like uncertain investments, bur peeking into them tells a different story and provides investment ideas.
- Coca-Cola Co KO
- PepsiCo, Inc. PEP
- Constellation Brands, Inc STZ
Food Products: +8.76%
- Albertsons Companies Inc ACI
- SpartanNash Co SPTN
- Andersons Inc ANDE
- Altria Group Inc MO
- British American Tobacco PLC BTI
- Vector Group Ltd. VGR
Electric Utilities: -1.71%
- NRG Energy Inc NRG
- DTE Energy Co DTE
- OGE Energy Corp. OGE
- PG&E Corporation PCG
- Black Hills Corp BKH
- Exelon Corporation EXC
Independent Power and Renewable Energy: -13.83%
- Clearway Energy Inc Class A (NYSE: CWEN.A)
- NextEra Energy Inc NEE
- First Solar, Inc. FSLR
Providers & Services: +1.23%
- National HealthCare Corporation NHC
- Davita Inc DVA
- Alignment Healthcare Inc ALHC
Health Care Tech: +1.22%
- Sophia Genetics SA SOPH
- Computer Programs & Systems, Inc. CPSI
- HealthStream, Inc. HSTM
- Viatris Inc VTRS
- Regencell Bioscience Holdings Ltd RGC
- Prestige Consumer Healthcare Inc PBH
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