By Conner Friel, Financial Newsletter
The potential for a crippling recession continues to loom large over U.S. markets in 2023.
Thanks in large part to rising inflation, Federal Reserve rate hikes and falling stock prices, many investors have decided to avoid profit-seeking for the time being, instead opting for the safety of bonds or cash.
As consumers cut back on their spending – and as the media drives home the impact of a potential recession – many businesses will struggle.
But there are a number of industries and investment opportunities that offer “recession-resistant” potential, meaning they can withstand economic downturns and continue to thrive.
For example, utility companies are often considered a recession-resistant investment. Regardless of the state of the economy, people will always need electricity, gas and water. These companies often have a monopoly in their respective markets, providing a stream of revenue even during tough economic times.
Healthcare is another example of a recession-resistant industry. No matter how hard a potential recession may hit, people will always need medical attention and supplies. That’s why investments in pharmaceuticals, medical device manufacturers and healthcare providers can be smart choices during a recession.
The same goes for consumer staples companies, as these are good that people consume regardless of the state of the economy. Food, beverages and household products will always be in demand and that makes the companies who manufacture and deliver those products safe options during tough times.
Finally, gold and precious metals are often considered safe-haven assets, and their value tends to increase during times of economic uncertainty.
Clearly there are a wide range of recession-resistant industries and assets that can provide a level of protection against economic downturns…no matter how much the economy struggles.
What follows is a list of 3 “recession-resistant” investments that appear well positioned to help investors survive and thrive provide viable options for the potentially difficult times ahead.
Please be sure to do your own due diligence and research any potential investment carefully before making any investment decision.
Recession-Resistant Investment #1 – Dollar General Corporation (NYSE: DG)
Dollar General Corporation (NYSE: DG), a discount retailer, provides various merchandise products in the southern, southwestern, Midwestern, and eastern United States.
It offers consumable products, including paper and cleaning products, such as paper towels, bath tissues, paper dinnerware, trash and storage bags, disinfectants, and laundry products; packaged food comprising cereals, pasta, canned soups, fruits and vegetables, condiments, spices, sugar, and flour; and perishables that include milk, eggs, bread, refrigerated and frozen food, beer, and wine.
What makes Dollar General such an attractive stock for investors seeking recession-resistant opportunities is that it sells most of its products for $10 or less. That means cost-cutting consumers seek out Dollar General even more than usual in times of economic uncertainty.
The company has 18,818 stores in 47 states across the country and posted trailing 12-month revenue of $36.3 billion. Many of its stores are located in rural, low-income areas where that store may be the only shopping destination in town.
Recession-Resistant Investment #2 – NextEra Energy, Inc. (NYSE: NEE)
NextEra Energy, Inc. (NYSE: NEE) through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, coal, and natural gas facilities.
It also develops, constructs, and operates long-term contracted assets that consists of clean energy solutions, such as renewable generation facilities, battery storage projects, and electric transmission facilities; sells energy commodities; and owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets.
NextEra Energy offers investors a unique “double play” when it comes to recession-resistant energy investing. First, the company has steady operating cash flow for its operations supplying electricity to retail and wholesale customers. And as stated earlier, that’s a need that doesn’t go away simply because the economy has slowed.
But NextEra Energy also offers the upside potential associated with renewable energy. That’s because the company is a global leader in solar and wind capacity, generating roughly 30 gigawatts of clean energy that help substantially lower its electricity generation costs.
Recession-Resistant Investment #3 – Humana Inc. (NYSE: HUM)
Humana Inc. (NYSE: HUM) operates as a health and well-being company in the United States. It operates through two segments, Insurance and CenterWell. The company offers medical and supplemental benefit plans to individuals.
It also has a contract with Centers for Medicare and Medicaid Services to administer the Limited Income Newly Eligible Transition prescription drug plan program; and contracts with various states to provide Medicaid, dual eligible, and long-term support services benefits.
In addition, the company provides commercial fully insured medical and specialty health insurance benefits comprising dental, vision, life insurance, and other supplemental health benefits, as well as administrative services only products to individuals and employer groups.
The health insurance industry is a strong industry for growth potential even in the face of a recession. Market research firm Vantage Market Research recently predicted that the global health insurance market will grow 4.4% per year to reach $3.3 trillion by 2028.
Humana’s status as the first largest publicly-traded health insurer – with a market cap of more than $59 billion – makes this an attractive, recession-resistant stock for investors to consider in the months ahead.