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22 Recession Resistant Stocks to Add to Your Portfolio in 2023

Disclaimer: This article is an educational guide to CFD trading and the financial markets and should not be considered as advice. Trading CFDs is high risk. Always ensure you understand the potential risks and rewards associated with trading before you trade.

 

 

Social media was buzzing with recession related conversation in 2022. Recession fears continue to loom large, but the global economy has worked hard to thwart the threat. Although global economic growth is expected to decelerate in 2023, the prediction has been raised from 2.7% to 2.9% by IMF. This is projected to accelerate again in 2024. As a trader or investor, it is still a good idea to diversify your portfolio to protect it against any slump in the global economy. The so-called recession-resistant industries have historically weathered these storms much better than others. They are also called defensive industries or stocks, as they help shield your investment portfolio from sudden and sharp downturns.

So, here’s a look at industries and stocks that are widely considered recession resistant.

A. Consumer Staples

Even when consumers tighten their budgets, they still spend on basic necessities, like groceries, household cleaning products, and toiletries. Among the most prominent consumer staple stocks are:

 

1. Walmart

Multinational retailer that operates hypermarkets, discount stores, and grocery stores.

NYSE: WMT
Market Cap: ~$390 billion
PE Ratio: 33.78
1-year Consensus Target Estimate: $161.72

2. Procter & Gamble (P&G)

US multinational corporation, founded in 1837.

NYSE: PG
Market Cap: ~$331 billion
PE Ratio: 24.65
1-year Consensus Target Estimate: $155.52

3. Costco Wholesale

Operates chain of membership bog-box stores in US, Canada, Europe and other countries.

NASDAQ: COST
Market Cap: ~$220 billion
PE Ratio: 37.60
1-year Consensus Target Estimate: $553.03

4. Unilever Plc

British-Dutch company, headquartered in London.

LON, ULVR and NYSE: UL
Market Cap: ~$130 billion
PE Ratio: 16.13
1-year Consensus Target Estimate: $52.70

5. Kroger (The Kroger Company)

Operates supermarkets and department stores across the US.

NYSE: KR
Market Cap: ~$32 billion
PE Ratio: 14.03
1-year Consensus Target Estimate: $52.47

Did you know?

Many of these large companies offer products of several brands that span different consumer budgets and preferences. This makes them more resilient against demand shortfalls.

 

B. Healthcare

During a challenging economic climate, people tend to work harder to hold onto their jobs. They may increase their spending on healthcare. Negative sentiment may also encourage people to spend more on insurance.

 

1. Eli Lilly

American pharma company that generates revenues from around 125 countries.

NYSE: LLY
Market Cap: ~$312 billion
PE Ratio: 50.09
1-year Consensus Target Estimate: $383.62

2. Merck

US pharma giant founded in 1891.

NYSE: MRK
Market Cap: ~$277 billion
PE Ratio: 19.12
1-year Consensus Target Estimate: $118.09

3. AbbVie

Spin-off from Abbott Laboratories.

NYSE: ABBV
Market Cap: ~$267 billion
PE Ratio: 22.73
1-year Consensus Target Estimate: $162.84

4. Pfizer

US-based pharmaceutical and biotechnology company.

NYSE: PFE
Market Cap: ~$240 billion
PE Ratio: 7.75
1-year Consensus Target Estimate: $52.52

5. AstraZeneca

British-Swedish pharma and biotech company.

LON, AZN and NASDAQ: AZN
Market Cap: ~$213 billion
PE Ratio: 64.95
1-year Consensus Target Estimate: $76.71

6. Moderna

Pharma company founded in 2010.

NASDAQ: MRNA
Market Cap: ~$61 billion
PE Ratio: 6.00
1-year Consensus Target Estimate: $233.00

C. Gold and Gold Mining Firms

Gold, in different forms, is considered the world’s most popular defensive asset class. It is said to be a “safe-haven” asset, which tends to spike sharply amid economic and political uncertainties. You can add exposure to this yellow metal by trading gold CFDs or adding gold mining stocks to your portfolio.

 

1. Newmont Corporation

Incorporated in 1921 in the US, this is the world’s largest gold mining company.

NYSE: NEM
Market Cap: ~$34 billion
PE Ratio: 23.41
1-year Consensus Target Estimate: $73.94

2. Barrick Gold Corp

This Canadian gold and copper mining company has sites in around 13 countries.

NYSE: GOLD
Market Cap: ~$28 billion
PE Ratio: 66.54
1-year Consensus Target Estimate: $21.80

3. AngloGold Ashanti Limited

This South Africa-based company was formed by the merger of AngloGold and Ashanti Goldfields.

JSE: ANG
Market Cap: ~$7 billion
PE Ratio: 23.50
1-year Consensus Target Estimate: $20.10

D. Utilities

Utilities are necessities that people continue to spend on. These sectors also benefit from government support and subsidies during economic slowdowns, which gives them an extra layer of protection.

 

1. NextEra Energy

Largest electric utility company by market cap.

NYSE: NEE
Market Cap: ~$146 billion
PE Ratio: 35.25
1-year Consensus Target Estimate: $95.52

2. Enel SpA

Italian electricity and gas company.

MI, ENEL and BIT: ENEL
Market Cap: ~€54 billion
PE Ratio: 21.99
1-year Consensus Target Estimate: €7.20

3. American Water Works Company

Provides water and wastewater services across the US.

NYSE: AWK
Market Cap: ~$26 billion
PE Ratio: 32.52
1-year Consensus Target Estimate: $160.56

Did you know?

There are major indices that track the performance of these industries. For instance, the S&P 500 Utilities tracks the stock performance of the top 500 utilities majors.

E. Feel-Good Products

Although this is not an industry, billions of dollars are spent every year on products that accompany our celebrations and make us feel good. These include energy drinks, other beverages, snacks, and cosmetics.

 

1. Coca-Cola Company

Energy and aerated drinks major.

NYSE: KO
Market Cap: ~$260 billion
PE Ratio: 27.39
1-year Consensus Target Estimate: $68.42

2. PepsiCo

Snack and beverages major.

NASDAQ: PEP
Market Cap: ~$243 billion
PE Ratio: 27.43
1-year Consensus Target Estimate: $189.50

3. Nestlé

Swiss multinational food and drink processing conglomerate

SWX, NESN and OTC: NSRGY
Market Cap: ~CHF291 billion
PE Ratio: 31.92
1-year Consensus Target Estimate: CHF121.00

4. Hershey Company

Among the world’s largest chocolate manufacturers.

NYSE: HSY
Market Cap: ~$49 billion
PE Ratio: 30.13
1-year Consensus Target Estimate: $252.70

5. L’Oréal

French personal care company

EPA: OR
Market Cap: ~€207 billion
PE Ratio: 38.66
1-year Consensus Target Estimate: €382.80

F. Lessons from the Pandemic

During economic hardships, companies tend to spend on technology to reduce costs. The global cloud computing market, estimated at $360 billion in 2022, is expected to reach $629 billion by 2028, representing a CAGR of 27.3%.

 

1. Cloud Computing

  • Amazon – Tech giant focusing on ecommerce, cloud computing, digital streaming, and AI.
  • Microsoft – Tech behemoth providing cloud computing and software products.

Also, being on a budget discourages people from eating out and traveling for vacations. They spend more time at home, a trend that boosted the revenues of certain companies during the pandemic.

 

2. Videogames, Metaverse & Social Media

  • Activision Blizzard
  • Meta Platforms

 

3. Streaming Services

  • Disney
  • Netflix

 

4. Search Engines

  • Google
  • Baidu

Although these were not traditionally considered recession-resistant stocks, experts believe these companies could outperform the market in case of a major slowdown.

Key Takeaways

  • A recession may not be around the corner in 2023. However, a well-diversified portfolio is a good risk management technique.
  • Consumers continue to spend on necessities even during a recession.
  • Defensive stocks have historically performed better than others during economic downturns.
  • Consumer staples, healthcare, personal care, utilities, and feel-good products could continue to see relatively stable demand.

 

*All statistics on this page can be found at https://finance.yahoo.com/

 

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