At some point in the next 2 years, investors in the United States are expecting a recession to hit this nation hard. And, in all actuality, there are many reasons why. From the Federal Reserve increasing interest rates aggressively to the skyrocketing prices at the gas pump, even the most lucrative stocks can be dragged to the bottom.
As these stressful economic times play out, everyone is also looking for a safe haven to defend their investments. And this can only be done by investing in the right types of stocks, particularly those classified as recession-resistant stocks.
Recession-resistant stocks, according to CFRA research analysts, have already been proven to be outstanding performers during the past two recessions in the U.S. (i.e. 2008 and the 2020 recessions). Here are 4 stocks that you may want to invest your money in during a recession.
Synopsys Inc. (ticker: SNPS)
Stocks like Synopsys are considered to be recession-resistant stocks for a number of different reasons. Because SNPS primary’s mission is to provide a platform for supplying semiconductor chips, and other technically advanced software applications, the company’s stock continues to perform well even when the economy takes a downturn. This is also mainly because their engineers can continue to design and test these chips for a global demand.
SNPS is also an established leader in EDA (electronic design automation) with a market share of 31%. Also, due to the inherently complex nature of chip designs, it has a strong solid market position. The projected annual revenue for SNPS is 17% within the next 3 years.
Lowe’s Cos. Inc. (LOW)
During a recession, the first reaction of the Federal Reserve is to cut interest rates. Once interest rates are at an all time low, there tends to be a domino effect that usually holds true, even during the pandemic. Starting with the lack of entertainment coupled with social distancing, a lot of DIY projects around the home begin to rise. As a result, Lowe’s stocks performed very well.
The homeowner’s need to invest in more home improvements projects coupled with the aspirations to increase the home’s net worth value for retirement, many homeowners use these times in productive activities. Lowe’s management teams embraced these changes, and performed exceptionally well during recessions.
Walmart Inc. (WMT)
Discount retailers like Walmart have also held their financial standing strong during stressful economic times. Even though its investors may not fully understand the significance of this company’s abilities to seize advancements in opportunities, there is a lot in the background going on. This is because Walmart is a retailer that’s well versed in a variety of aggressive moves, including pursuing alternative profits sources, recognizing omnichannel opportunities to increase sales, making continual improvements in its supply chain, looking for diverse geographical mixes and new products.
So, the growth potential of Walmart is continually upward because of its future prospects. For instance, the majority of Walmart’s $17 billion in capital is slated to go toward advancements in technology, automation and e-commerce.
Home Depot Inc. (HD)
Similar to the performance of Lowe’s Inc, Home Depot is also situated in a position of strong financial investment strength and growth. This company has benefited from the same tail winds that have driven Lowes to outperform other stocks in economic stressful times. For instance, as virtually every sector on the market was crushed during the pandemic, Home Depot was able to grow and increase their market share in 2020.
As a result of their strong standing, they are considered to be a great option for long-term investors and newbies alike who enter the stock market. However, there is at least one caveat that investors need to monitor closely, due the company’s volatility in the lumber market. With Home Depot’s positioning as the best selling material, these sales can be weakened, especially in off season home building construction times.
The next 2 years in the United States are projected to be critical times, especially due to the looming possibilities of another recession happening at any time. Therefore, investors are starting early looking for the best investment opportunities that can withstand these economic downturns.