An economic recession might change your day-to-day spending habits, but it doesn’t have to mean hitting the pause button on your investments.
In this guide, you’ll discover the best recession stocks to buy in 2022. Consider adding some of these companies to your portfolio for greater diversity — or simply to grow your investments regardless of the state of the economy.
What Companies Make the Best Recession-Proof Stocks?
The weakening world economy has had major impacts at home. Some economists fear that if the U.S. Federal Reserve doesn’t reverse course on its interest rate hikes, America could face a worsening economic climate.
That’s the bad news. The good news is that some companies resist these sorts of economic downturns — the best recession-proof stocks tend to come from industries such as:
- Consumer staples (food, beverages, healthcare products)
- Grocery stores
- Cosmetics
- Energy companies and utilities
- Financial companies
- Real estate companies
- Insurance providers
- Healthcare
- Telecommunications
Of course, this is just a representative list of common recession-proof industries. With the right stock picks, you can find companies in every sector that thrive even during a recession.
The Best Recession-Proof Stocks (2022)
What are the best recession-proof stocks of this year? Here are just a few companies that you might consider adding to your portfolio:
Walmart Inc (WMT)
Walmart’s consistently low prices make it a natural staple during a recession. After all, American consumers may abstain from luxury goods but still need a go-to store for their basic necessities.
With Walmart’s eCommerce site expanding, the company is seeing steady growth in spite of national economic concerns. These factors might just make Walmart one of the best recession-proof stocks 2022 has to offer.
Chipotle Mexican Grill (CMG)
Restaurants aren’t always the best choice of stock during a recession, but Chipotle seems to be thriving even when consumers have cheaper options like Wendy’s and McDonald’s. Apparently, its commitment to fresh ingredients and evolving menu options appeal to consumers who aren’t hit as hard by the recession as a whole.
And recent price increases have only driven the company’s overall performance. This consistent performance makes Chipotle a strong recession stock, though investors should still keep an eye on how future price increases may influence consumer behavior.
Procter & Gamble (PG)
Consumer staples stocks are always a solid bet during a recession, and Procter & Gamble is no exception. The company is best known for consumer brands that include Tide, Gillette, Head & Shoulders, and Febreze — just to name a few.
Most recently, the company has focused on product divisions that include cleaning and personal hygiene, which paid off in a big way during the 2020 pandemic. Now, sales remain steady as consumers continue to rely on the company for everyday household essentials, making this one of the best recession stocks today.
Costco Wholesale (COST)
Recession-proof stocks include more than just consumer staples and household goods. They also include the stores that distribute them. Costco has long been a dependable company to invest in, and now that America is facing a recession, many customers are flocking to “shopper’s club”-based stores looking for bargains.
Given Costco’s membership model, the company only stands poised to grow as more people sign on. This setup makes Costco a solid choice both in and out of the current recession.
McDonald’s Corp (MCD)
Luxury dining may be down during a recession, which prompts diners to seek out cheaper alternatives. That includes the fast-food giant McDonald’s, where success has remained steady even as restaurants have been forced to raise menu prices to keep up with inflation.
Additionally, the company’s global reach gives it added stability compared to other restaurant chains, which makes it a strong choice for recession-minded investors.
O’Reilly Automotive (ORLY)
With rising gas prices, Americans are driving less than usual. Usually, that’s bad news for those in the automobile industry. But when the price of both new and used cars remains high, drivers are more likely to maintain the cars they currently own. That’s good news for auto parts dealers like O’Reilly Automotive.
The company flourishes in an economy that values maintenance, which makes it one of the best recession stocks for car lovers. When the recession eventually lifts, the company will remain profitable since American driving habits will normalize and increase the demand for automotive parts and service.
Home Depot (HD)
The current housing market is changing the expectations of would-be homebuyers. For some, it’s better to remodel their current living space than try to navigate the fluctuating prices of newer homes. Others are proceeding with a purchase but opting for fixer-uppers to reduce overall costs.
Both of these trends are good news for home improvement stores like Home Depot. Not only is Home Depot a great company to invest in during a recession, but retail giants naturally make great buy-and-hold stocks once the economy normalizes.
Pfizer Inc (PFE)
Pfizer enjoyed a considerable boost during the COVID pandemic, and even now, the company maintains a strong profile thanks to its broader line of pharmaceuticals and therapies.
Healthcare stocks naturally make great recession-proof stocks since Americans need healthcare regardless of where the economy is trending. This fact alone makes Pfizer an excellent choice for investors, and it might also be a smart choice for those wanting to add a healthcare stock to diversify their portfolio.
Johnson & Johnson (JNJ)
Johnson & Johnson is known for three key areas: pharmaceuticals, medical devices, and consumer products. The fact that the company’s products span these three distinct areas makes it one of the best recession-proof stocks 2022 has to offer.
It might also be a good choice for those looking for dividend stocks since the company most recently paid $1.06 per share to holders of its common stock. This passive income might be welcome during a recession, though stockholders can also reinvest their dividends through the company’s Dividend Reinvestment Program.
Kraft Heinz Inc (KHI)
Your next investment idea might be as common as your ketchup bottle. Of course, Kraft Heinz Inc makes a variety of common household foods and condiments, which is why the company has consistently been ranked among the best recession stocks.
Kraft Heinz is also known for offering affordable products, which means that it remains profitable as consumers look to the company to help them stretch their budgets.
The Coca-Cola Company (KO)
The Coca-Cola Company saw some turbulence during the era of the pandemic — mainly due to the fact that closing restaurants meant fewer people were dining out. But now that things have largely normalized, the company is rebounding.
Additionally, the company recently acquired the Body Armor sports drink brand, already a major competitor to Gatorade. This acquisition makes Coca-Cola a great investment for the recession, but it also makes it a great buy-and-hold stock.
Comcast Corporation (CMSCA)
Telecommunications companies are also solid, recession-proof choices, and right now, Comcast might be one of the most undervalued stocks in the sector. Investors might use this opportunity to grab a stock in the tech and telecommunications industry, especially one that’s expected to rebound in the very near future.
It’s also a great stock for those looking for dividend payments, which can provide some additional relief during a period of recession.
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