What are the best stocks for a bad economy?
The best recession stocks include consumer staples, utilities and healthcare companies, all of which produce goods and services that consumers can't do without, no matter how bad the economy gets.
| Stock | Implied upside from Feb. 21 close |
|---|---|
| Synopsys Inc. (SNPS) | 6.3% |
| Accenture PLC (ACN) | 3.6% |
| T-Mobile US Inc. (TMUS) | 12.8% |
| Walt Disney Co. (DIS) | 11.5% |
- Stock funds. A stock fund, either an ETF or a mutual fund, is a great way to invest during a recession. ...
- Dividend stocks. ...
- Real estate. ...
- High-yield savings account. ...
- Bonds. ...
- Highly indebted companies. ...
- High-risk assets such as options.
Companies in the business of providing tools and materials for home improvement, maintenance, and repair projects are likely to see stable or even increasing demand during a recession. So do many appliance repair service people. New home builders, though, do not get in on the action.
You should avoid cyclical stocks during a recession. These companies need the economy to be in an expansionary phase to thrive, so their earnings and share prices tend to decline sharply during a recession.
Generally, the industries known to fare better during recessions are those that supply the population with essentials we cannot live without that. They include utilities, health care, consumer staples, and, in some pundits' opinions, maybe even technology.
And, if prices start to rise, you'll end up buying more shares at the lower prices and fewer shares when your favorite stocks start to get more expensive. In a nutshell, a recession can be a great time to buy the stocks of top-notch businesses at favorable prices.
Many investors turn to stocks in companies that sell consumer staples like health care, food and beverages, and personal hygiene products. These businesses typically remain profitable during recessions and their share prices tend to better resist stock market sell-offs.
Treasury Bonds
Investors often gravitate toward Treasurys as a safe haven during recessions, as these are considered risk-free instruments. That's because they are backed by the U.S. government, which is deemed able to ensure that the principal and interest are repaid.
Because of their higher level of sensitivity to interest rates, long-term bonds have historically fared best during recessions, although intermediate-term bonds and cash have also been pretty resilient.
What not to buy in a recession?
During an economic downturn, it's crucial to control your spending. Try to avoid taking on new debt you don't need, like a house or car. Look critically at smaller expenses, too — there's no reason to keep paying for things you don't use.
As you can see, getting rich during a recession isn't that complicated. Keep your expenses low, make sure you have steady income, and invest as much as possible. If you're able to do that, you'll come out ahead.
A recession is “a significant decline in economic activity spread across the economy, lasting more than a few months.” Industries affected most include retail, restaurants, travel/tourism, leisure/hospitality, service purveyors, real estate, & manufacturing/warehouse.
The best recession stocks include consumer staples, utilities and healthcare companies, all of which produce goods and services that consumers can't do without, no matter how bad the economy gets.
Cash. Cash is an important asset when it comes to a recession. After all, if you do end up in a situation where you need to pull from your assets, it helps to have a dedicated emergency fund to fall back on, especially if you experience a layoff.
Walmart has 8.32% upside potential, based on the analysts' average price target. Is WMT a Buy, Sell or Hold? Walmart has a conensus rating of Strong Buy which is based on 25 buy ratings, 3 hold ratings and 0 sell ratings.
Sundaram: Amazon isn't recession-proof, but it's recession-resilient. Arun Sundaram, Analyst at CFRA, joins Worldwide Exchange to discuss Amazon's Q2 earnings.
The best performing investments during the Depression were government bonds (many corporations stopped paying interest on their bonds) and annuities.
- Dollar General Corporation (NYSE: DG)
- Home Depot Inc. (NYSE: HD)
- Bunge Limited (NYSE: BG)
- Dollar Tree (NASDAQ: DLTR)
- UnitedHealth Group Incorporated (NYSE: UNH)
- Walmart Inc. (NYSE: WMT)
- Synopsys, Inc. (NASDAQ: SNPS)
- Target Corp. (NYSE: TGT)
When things are looking bleak, consider holding on to your investments. Selling during market lows can be one of the worst things you can do for your portfolio — it locks in losses.
Why is cash king in a recession?
The phrase means that having liquid funds available can be vital because of the flexibility it provides during a crisis. While cash investments -- such as a money market fund, savings account, or bank CD -- don't often yield much, having cash on hand can be invaluable in times of financial uncertainty.
It's safe from the stock market: If a recession causes short-term market volatility, you won't lose money on your high-yield savings deposits, unlike investing in the stock market. The APY will be working for you regardless (though it could be lower than the rate you had when you opened the account).
The easiest way to get rich during a recession is to invest as much money into the stock market as you can. When there's a recession, stock market performance declines. Consumers spend less and companies earn less, causing investors to worry.
The result? When the market rebounded, Getty was a rich man, thanks to his action when the economy appeared to be at its worst. The same thing happened to people like Warren Buffett, Jamie Dimon, and Carl Icahn during the Great Recession of 2008. Each zigged when the rest of the world zagged.
Lower prices — A recession often hits after a long period of sky-high consumer prices. At the onset of a recession, these prices suddenly drop, balancing out previous long inflationary costs. As a result, people on fixed incomes can benefit from new, lower prices, including real estate sales.
