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10 "Recession Proof" Stocks That Will Thrive During The Next Downturn in 2020

Posted on Saturday, August 4th, 2018 by Matthew Paulson
10 Recession Proof Stocks That Will Thrive During The Next DownturnThe prevailing sentiment among Wall Street analysts these days is that a recession is coming. The market has been on a historic nine-year bull run after the Great Recession, punctuated by a run at the end of 2017 that saw new market highs being reached seemingly every day. But, in investing what comes up will go down. Fortunately, recessions do not have to be the death knell for stocks. In fact, there are several stocks that have a history of performing well even when the economy does not.

Let’s take a quick look at some of the companies who are positioned to help your portfolio not only survive, but thrive, when the stock market does take its inevitable tumble.

#1 - Wal-Mart (NYSE:WMT)

Walmart logo

WalMart (WMT) is one of those companies that keeps it simple, advertising and delivering on “Everyday low prices.” In robust economies, the retailer may be “discounted” by analysts as it finds its margins squeezed, but the company consistently shines during recessions. The company benefits from its chain of Sam’s Club stores which cater to consumers who buy in bulk. These stores tend to thrive as consumers look for the value of bulk purchases to make their dollars stretch. In the past year, WalMart has been actively increasing its e-commerce efforts in response to the popularity of Amazon, and analysts are seeing those efforts begin to pay off. A strong e-commerce presence would provide additional support for WalMart should the economy move into recession.

In 2008, the company posted a 7.2 percent revenue gain and a stock price increase of 20%, beating the S&P 500 by 58.5%. And WalMart was one of the few companies to increase their dividend yield during 2008, despite warnings from Wall Street. This was particularly impressive since some businesses were cutting their dividends altogether. The current consensus opinion of analysts is a hold. Despite this, WalMart’s stock is expected to achieve 8.6 percent growth in 2018.

About Walmart
Walmart Inc engages in the retail and wholesale operations in various formats worldwide. The company operates in three segments: Walmart U.S., Walmart International, and Sam's Club. It operates supercenters, supermarkets, hypermarkets, warehouse clubs, cash and carry stores, discount stores, drugstores, and convenience stores; membership-only warehouse clubs; ecommerce websites, such as walmart.com, walmart.com.mx, asda.com, walmart.ca, flipkart.com, and samsclub.com; and mobile commerce applications. Read More 

Current Price: $142.65
Consensus Rating: Buy
Ratings Breakdown: 26 Buy Ratings, 9 Hold Ratings, 2 Sell Ratings.
Consensus Price Target: $141.35 (0.9% Downside)



#2 - Johnson and Johnson (NSE:JNJ)

 logo

It’s almost too easy to talk about Johnson & Johnson’s (JNJ) status as a Dividend Aristocrat as a reason this stock should be in your portfolio during a recession, but it’s hard to overstate. J&J is one of only 19 companies that can say they have offered 50 consecutive years of dividend growth. That’s a long time. And it shows no sign of ending. This is because of a well-diversified portfolio both in terms of the products they provide and the markets in which those products are sold. They offer brands that are literally household names such as Neutrogena and Listerine.

The company has three operating segments that are proven to weather economic headwinds: pharmaceuticals, medical devices, and consumer health. Normally, having diversification over several segments allows one or two units to pick up the slack when others underperform. In the case of J&J, all their business units continue to make a profit, allowing the company to generate significant cash flow, which should allow them to continue to issue a healthy dividend, making this stock very attractive to investors. 

About


Current Price: $0.00
Consensus Rating: N/A
Ratings Breakdown: 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: N/A



#3 - General Mills (NYSE:GIS)

General Mills logo

General Mills (GIS) is one of those stocks that can be owned in good times and bad. However, demand for their products tends to increase during recessions largely because consumers will seek their products as they trim their entertainment budgets.

General Mills stock avoids the volatility that is typically associated with high return stocks. Case in point, in the last 10 years, the stock of General Mills has an annualized standard deviation of 17 percent. And, like many companies on this list, General Mills is a Dividend Aristocrat offering a dividend that has been steady or increasing for 115 years. This combination of low volatility and consistent dividend payments without a reduction is more in line with what you’d expect from a utility stock. However, this is a company that expects double-digit total returns. In fact, in the 20-year period from 1995-2015, General Mills averaged an 11 percent total return per year, beating the broader S&P 500 which averaged 9 percent per year. The stock is trading for an adjusted price-to-earnings ratio of 18.9, which could make it a nice bargain ahead of the next financial crisis.

About General Mills
General Mills, Inc manufactures and markets branded consumer foods worldwide. The company operates in five segments: North America Retail; Convenience Stores & Foodservice; Europe & Australia; Asia & Latin America; and Pet. It offers ready-to-eat cereals, refrigerated yogurt, soup, meal kits, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza and pizza snacks, snack bars, fruit snacks, nutrition bars, and savory snacks, as well as organic products, including refrigerated yogurt, frozen and shelf-stable vegetables, meal kits, salty snacks, ready-to-eat cereal, and grain snacks. Read More 

Current Price: $61.02
Consensus Rating: Hold
Ratings Breakdown: 8 Buy Ratings, 8 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $63.47 (4.0% Upside)



#4 - Pfizer (NYSE:PFE)

Pfizer logo

Pfizer (PFE) is another one of those stocks that can find the going tough in a booming economy. Like many companies it’s only offense in the short term is that it’s not growing as fast as investors would like. They do have some questions about their pipeline of new products, and they lost exclusivity of their Viagra brand in December of 2017. All this has some analysts urging buyers to hold on this stock. However, a closer look at the analysts’ reports showed that the next largest block of analysts gave the stock a buy rating. Do they know something? Maybe, but if you’re reading this, you’re looking for stocks that should perform well in a recession. And there’s little doubt that Pfizer can play that role very well. Consumers will need, and want, their products. And since bottoming out at the beginning of the great recession in 2009, the stock has been trending upward, albeit perhaps at a slower rate than its competitors.  It continues to pay a dividend. Its next dividend will be valued at $1.36 per share with a dividend yield of 3.52 percent.

About Pfizer
Pfizer Inc discovers, develops, manufactures, and sells healthcare products worldwide. It offers medicines and vaccines in various therapeutic areas, including internal medicine, vaccines, oncology, inflammation and immunology, and rare diseases under the Lyrica, Chantix/Champix, Eliquis, Ibrance, Sutent, Xalkori, Inlyta, Xtandi, Enbrel, Xeljanz, Eucrisa, BeneFix, Genotropin, and Refacto AF/Xyntha brands. Read More 

Current Price: $37.50
Consensus Rating: Hold
Ratings Breakdown: 5 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $39.79 (6.1% Upside)



#5 - Procter and Gamble (NYSE:PG)

The Procter & Gamble logo

To look at Procter & Gamble (PG) shares as a solid option to get you through a recession, you have to sort of tune out a lot of the bad news that’s been surrounding it lately. This large-cap company has been failing to keep up with the S&P 500 for quite some time. In fact, over the last 10 years, P&G’s stock has risen 12%, about half of the broader market. But when you're looking at recession-proof stocks, you're not blitzing the quarterback, you're playing defense, and P&G is a defensive stock that was built to weather the tough times. Why? Brand names that every consumer needs, every single day. But they play in an arena that's ripe with competitors and requires a company that is committed to operating efficiently. And that's exactly what investors can expect from P&G. This company has been one of the Dividend Aristocrats for 62 years. Its latest dividend was valued at $2.87 per share for an impressive dividend yield of 3.58 percent.

About The Procter & Gamble
The Procter & Gamble Company provides branded consumer packaged goods to consumers in North and Latin America, Europe, the Asia Pacific, Greater China, India, the Middle East, and Africa. It operates in five segments: Beauty; Grooming; Health Care; Fabric & Home Care; and Baby, Feminine & Family Care. Read More 

Current Price: $142.36
Consensus Rating: Buy
Ratings Breakdown: 8 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $144.50 (1.5% Upside)



#6 - Dollar Tree (NASDAQ:DLTR)

Dollar Tree logo

It’s hard not to love a stock that’s quadrupled in value over the last decade. Still, Dollar Tree (DLTR) has been taking it on the chin lately. Their crime? Their growth is slower than expectations. This is indicative of companies like Dollar Tree that have a business model that caters to value-conscious consumers. When the economy is growing, consumers feel more comfortable doing all their shopping at full-price rivals, rather than splitting their shopping trips looking for bargains. However, when the economy starts to slow down, many of these shoppers return to Dollar Tree.  After all, as the name implies, you can buy many items for just one dollar.

Dollar Tree proved its mettle in the last recession, generating a 2008 return of 60.8 percent which outpaced the S&P 500 by 99.3 percent. If there is an economic downturn, companies like Dollar Tree are well positioned because they are not as exposed to the e-commerce trend and, in fact, can offer some value that even those companies can't.

About Dollar Tree
Dollar Tree, Inc operates discount variety retail stores. It operates through two segments, Dollar Tree and Family Dollar. The Dollar Tree segment offers merchandise at the fixed price of $1.00. It provides consumable merchandise, including candy and food, and health and beauty care, as well as everyday consumables, such as household paper and chemicals, and frozen and refrigerated food; variety merchandise comprising toys, durable housewares, gifts, stationery, party goods, greeting cards, softlines, and other items; and seasonal goods that include Valentine's Day, Easter, Halloween, and Christmas merchandise. Read More 

Current Price: $92.82
Consensus Rating: Buy
Ratings Breakdown: 14 Buy Ratings, 8 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $104.85 (13.0% Upside)



#7 - McDonalds (NYSE:MCD)

McDonald's logo

Some consumers might say it’s hard to recognize McDonald’s (MCD) anymore. The golden arches have receded from view, as the fast-food giant has refreshed the look and experience of their stores to compete with new entries in the fast-casual segment. Still, despite in-store kiosks and even home delivery in some markets, McDonald’s is showing that it understands, and is devoted to, its core customer. These customers represent the true believers of the brand and it’s where the company expects its growth to come from. Says CEO Steve Eastbrook, “We remain focused on delivering the most enjoyable experience for every customer, every visit," he said. "Whether that is when they visit a modernized restaurant with inviting hospitality or through the convenience of having delicious food delivered to their home, we know that our fundamental day-to-day commitment to our customers is running great restaurants."

McDonald’s focus on their core customer was rewarded during the last recession when their revenue grew 3.2 percent and operating income increased 17 percent. For the year, their stock had an increased return of 8.5 percent, outperforming the S&P 500 by 47 percent. There’s no reason to believe that McDonald’s won’t enjoy a similar performance whenever the next recession hits.

About McDonald's
McDonald's Corporation operates and franchises McDonald's restaurants in the United States and internationally. Its restaurants offer various food products and beverages, as well as breakfast menu. As of December 31, 2019, the company operated 38,695 restaurants. McDonald's Corporation was founded in 1940 and is based in Chicago, Illinois.

Current Price: $222.75
Consensus Rating: Buy
Ratings Breakdown: 21 Buy Ratings, 7 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $221.38 (0.6% Downside)



#8 - Costco (NASDAQ:COST)

Costco Wholesale logo

Costco (COST) is showing that there can be steady growth in a sector that includes Amazon. Like other companies in this segment, Costco competes for the consumers who find buying in bulk an attractive option when the economy is good, and even more so when times get tough. These consumers are true believers in this model and, for them, a trip to Costco can be a destination shopping event. And while some retailers continue to struggle, Costco has seen same-store sales increase by almost 10 percent in the first half of 2018. And despite a price increase, membership renewal rates (which generate much of their profit) have remained steady at around 90 percent.

In fact, with their investment into e-commerce and home delivery and new locations due to open, including an anticipated expansion into China, analysts are predicting Costco’s net income average growth to be just shy of 12 percent (11.9) for the next five years. Costco’s stock is now trading near an all-time high, and while it may be seen as pricey now (their current price-to-earnings ratio is 28), the company is well positioned for long term growth, even if another global recession hits.

About Costco Wholesale
Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories. The company provides dry and packaged foods, and groceries; snack foods, candies, alcoholic and nonalcoholic beverages, and cleaning supplies; appliances, electronics, health and beauty aids, hardware, and garden and patio products; meat, bakery, deli, and produces; and apparel and small appliances. Read More 

Current Price: $373.05
Consensus Rating: Buy
Ratings Breakdown: 19 Buy Ratings, 10 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: $368.54 (1.2% Downside)



#9 - Ross Stores (NASDAQ:ROSS)

 logo

When the economy slows, buyers flee towards value. That’s where companies like discount clothing retailer Ross Stores (ROST) thrive.  While already capturing the budget-minded shopper, the company has displayed proven performance among more affluent consumers when the economy slows. During the 2008 recession, the company added 66 stores. And by rewarding its shareholders with a 17.6 percent return in that time, it beat the S&P 500 average by 56 percent. In advance of their second-quarter earnings announcement on August 16, analysts are projecting a 6.4 percent increase in year-over-year sales. The consensus rating on Ross Stores is a buy, with stock prices forecast to increase up to 0.7 percent. Investors also look for the relative security of dividend stocks during recessions. Ross Stores pays an annual dividend of $0.90 per share with a current dividend yield of 1.04 percent. The company has increased its dividend every year for the last 11 years at an average of 17% each year, making it a great potential source of income during the next downturn.

About


Current Price: $0.00
Consensus Rating: N/A
Ratings Breakdown: 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target: N/A



#10 - Amgen (NASDAQ:AMGN)

Amgen logo

Amgen (AMGN) has presented a bit of a puzzle to analysts. On the one hand, their top line has slowed because their former top drug, Embrel, has seen its revenue slow. However, the drug is still on pace to generate $4.2 billion in sales in 2018. Furthermore, Amgen projects that it will maintain exclusivity with Embrel through 2029. The company also has released a new migraine drug, Aimovig, which they are hoping will buoy the top line. For all the concern about their top line, Amgen released their second-quarter earnings on July 26 and beat estimates. Furthermore, analysts have Amgen rated as a consensus buy and their stock price is forecast to have a 6.2 percent upgrade in 2018. The company also issued a $1.32 per share dividend, equating to a 2.77% dividend yield.

Furthermore, the company is in one of a handful of recession-proof industries. Consumers need their medicines and that is one area where they are unlikely to scale back.  This was evident in 2008 when Amgen posted a 24.3 percent return, outperforming the S&P 500 by 62.8 percent.

About Amgen
Amgen Inc discovers, develops, manufactures, and delivers human therapeutics worldwide. It focuses on inflammation, oncology/hematology, bone health, cardiovascular disease, nephrology and neuroscience areas. The company's products include Enbrel to treat plaque psoriasis, rheumatoid arthritis, and psoriatic arthritis; Neulasta, a pegylated protein to treat cancer patients; Prolia to treat postmenopausal women with osteoporosis; Xgeva for skeletal-related events prevention; Aranesp to treat a lower-than-normal number of red blood cells and anemia; KYPROLIS to treat patients with relapsed or refractory multiple myeloma; Sensipar/Mimpara to treat secondary hyperparathyroidism; and EPOGEN to treat anemia caused by chronic kidney disease. Read More 

Current Price: $223.27
Consensus Rating: Buy
Ratings Breakdown: 15 Buy Ratings, 12 Hold Ratings, 1 Sell Ratings.
Consensus Price Target: $255.24 (14.3% Upside)

 

Fainthearted investors don’t like to hear the words “bear market” and “recession”. To avoid the roller coaster of seeing the value of their portfolio temporarily drop, they may opt out of the market altogether. But savvy investors know that bear markets and global recessions give investors the opportunity to buy quality stocks at tremendous discounts. The question is knowing which recession-proof businesses to pick.

Some of the recession proof stocks on this list have a history of not only paying a dividend but taking care that it is steady or increasing every year. Others have lower a price-to-earnings ratio than the broader market. All of them play in the sectors that are the most immune from recessions. People will still eat fast food, they’ll get their prescriptions, and they will still buy their consumer staples. And if you look to invest in these companies, your portfolio will be well positioned to help carry your portfolio through a recession--regardless of what the stock market does.

7 Stocks to Own For the Next Decade

According to Blackrock (NYSE:BLK) analysts, investors who are looking for growth as the economy begins to recover need to be in stocks. In fact, many investors are breathing a sigh of relief for not panicking when the market sold off in February and March.

But while a Black Swan event like the Covid-19 pandemic can teach investors short-term lessons, the trick to buy-and-hold investing is identifying companies that give you the confidence to invest for not just 10 weeks, but 10 years.

For many investors this means identifying key trends. Prior to the pandemic, trends were emerging. Those trends, such as e-commerce, financial technology, digital healthcare, are quickly becoming part of our “new normal.” Think about it. Cash is now literally “dirty money”. E-commerce is not just convenient, it’s essential. And we’ve figured out that the patient-doctor relationship can take place via videochat.

And all of this feeds into other trends, which includes the idea that our smartphones are only going to become more powerful, and more important. But the next 10 years are not destined to be the decade of stealth small-caps. Many of the companies that are well positioned for the next decade will be familiar to most investors.

Here are 7 companies that are going to become increasingly relevant over the next decade. When you buy them now, you’ll be thanking yourself when the calendar turns to 2030.

View the "7 Stocks to Own For the Next Decade" Here.






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