In tough economic times, recessions are inevitable. Many companies suffer during a recession. However, some companies could do well during these economically challenging times that could last through the year 2021.
With money being scarce, many would shy away from investing in any stock.
Some stocks could bring you good returns and carry you until the economy recovers. These are sectors of the economy that continue to do exceptionally well during an economic crisis.
Clorox is a company bound to do well during the pandemic. Already the sales for their bleach and disinfectant wipes are off the roof. Customers trust them. These are stocks worth investing in.
From the moment the pandemic hit, there was massive panic buying. People made orders of food and other perishable stuff. They also ordered a variety of items to entertain themselves. Because Walmart supplies all these items, they got so much business they had to expand by hiring new workers by the thousands.
Even when a majority of the jobs are temporary, 22,500 individuals are highly likely to become permanent workers. Previous experience shows that Walmart thrived when the Great Recession happened, unlike S & P 500.
There has been a 3% gain in Walmart stocks since February 19. That is not so for S & P 500 that went down by 4%.
3. Lockheed Martin
In the year 2020, the US Department of Defense was allotted 738 billion dollars. Some of the companies like Lockheed Martin benefit from sales proceeds that they get from the Department of Defense.
The spending of the Department of Defence has gone up by 12.2%. Six past recessions have shown the department increasing their spending, except in one. 28% of what they spend goes to Lockheed Martin.
This company has already expanded its workforce by 1000 workers during the pandemic. They still have a deficit of 5000 more to fill vacant positions. It is, therefore, a go-to company during the recession.
4. Invest in utility stocks
In shaky economic times, investing in utility stocks is a wise idea. People have to settle those bills to keep enjoying essential commodities like gas, water, and electricity.
The dividends are high and steady. You will get a consistent supply of income.
Some such companies include American Water Works, Duke Energy, American Electric Power, NextEra Energy and many others.
5. Procter & Gamble Company
The business’s products will not diminish in use with the onset of the recession. Their products are a daily necessity for the average American. They manufacture Ivory soap, Head & Shoulders shampoo, Crest toothpaste, Oral B toothbrushes, and so much more.
Their sales are keeping up with the recession. So far, the company has exceeded its growth projections in every way. Whether for quick medical remedies or grocery needs, customers buy the company’s products.
The company can assure a dividend yield of 2.6%.
6. Kroger grocery chain store
This grocery chain supplier has business booming with the current dividend yield of 1.9%. Their sales went up in mid-March when people decided to stock up for the lock-down.
If the Great Recession is anything to go by, there was a registered increase in sales back then. People entertained in their homes more and ate out less. Their sales were also better as compared to Walmart.
So far, the store chain has gained 12% from February 19.
7. McDonald’s Restaurant Chain
Being an eatery frequented by the middle-class continues to thrive even during a recession because of its pocket-friendly prices. Further, those that frequent upscale restaurants will opt for this restaurant chain when money gets tight.
Its current dividend yield is 2.5%. It expanded its reach by hundreds of stores during the last recession. There is a likely chance of the restaurant chain doing well in the recession, brought on by the pandemic.
The enterprise found favor with investors when that recession hit.
8. General Mills
This American company is the origin of many other brands that sell consumer products. It is how they sell their products. It was not impacted negatively by the Great Recession.
Big brands like Annie’s Homegrown, Betty Crocker, Pillsbury, Cheerios, Totino’s, among others, were not affected by the Great Recession.
So far in the year, there has been more demand for frozen products, cereals, and pet foods. They expect the EPS to go up within the fiscal year 2020 from an expected 3% to 5% to 6%-8%.
9. Buy stocks from Church & Dwight.
During the Great Recession, women aged 20 to 24 years old did not have as many babies as they usually would. Reproduction was less likely to happen during economically challenging times.
It was therefore likely that most couples who lost jobs during that time were strict on the use of birth control from 2008 to 2011. Children are expensive to raise, requiring about a quarter of a million dollars to do that.
That being the case, they own a well-known condom brand, Trojan, which dominates the US market. In addition to this, the company hosts other brands that are products useful in the kitchen, for oral care, pregnancy tests, laundry cleaning, among others, like Arm & Hammer, Spinbrush, Waterpik, Orajel, First Response, and Oxyclean. All these produce 80% of the revenues.
It is the consistency in the USA markets that makes it worthy of your investment during the current recession.
10. O’Reilly Automotive (ORLY)
This company mainly sells spare parts for vehicles. They have a good range of the same both for the DIY customer and the professionals. It is likely that as the pandemic escalates, many will opt for DIY.
Sales will skyrocket as people DIY during this season. Also, people will be keeping their current vehicles rather than getting new ones as they save money for other things.
In 2017, ORLY received tough competition from Amazon. However, they overcame the setback or threat. They have been able to exceed double their revenue since 2017. It will not be a bad risk to invest in ORLY stocks during this recession.
This company falls into a category where people buy to consume. It has also dealt with the issue of customers cutting back on the traditional sugary soda. There are healthy consumables like Tropicana juices, Aquafina water, Naked smoothies, Bubbly sparkling water, Lipton iced teas, and Gatorade.
It has also partnered with Starbucks to come up with bottled drinks. PepsiCo’s snacks division of Frito-Lay is the better earner for the company.
Investors would inevitably want the company to emphasize this thriving product while balancing the costs of doing so elsewhere. The company is slated for sustainable long term growth.