Recession has somewhat become a common expression since the great recession of 2007 to 2009. It affected nations like the United States and many countries worldwide.
As a result, stock markets hit new all-time lows, hurting number investors and stockholders.
Although another global recession seems unlikely, you don’t need to worry about certain investments even in the event of a recession. In this article, we discuss five investments that are recession-proof.
5 Recession Proof Investments in 2022
Some industries are less vulnerable to a recession than others. These sectors can endure the economic challenges that other industries buckle underneath. They are often called recession-proof industries. Below are five recession-proof investments you can make in these industries.
1. Consumer Staples
Essential household items will always be in demand no matter the state of the economy. These set of items are known as consumer staples. They include soap, toothpaste, water, toilet paper, paper towels, shampoo and many more.
Consistent profitability, stable growth, strong dividends, and low volatility characterize the consumer staples business. While these characteristics may not be the most appealing during moments of economic development, they are critical to success during a recession.
Consumer staples are recession-proof because the business can prosper during periods of poor economic development since their products are necessary and in high demand among consumers. You can invest in companies like Procter & Gamble, Hershey, Coca-Cola, PepsiCo, Unilever as they’re amongst the largest consumer staple firms.
2. Alcoholic Beverage Companies
Alcoholic beverages like beer, wine, and distilled drinks are generally in-demand items. They maintain a good amount of desirability in recession periods and in recent years, a tiny number of firms has bought many of the world’s major beer and alcohol brands.
Brands like Budweiser, Corona, Stella Artois, Beck’s, Leffe, and Hoegaarden are owned by Anheuser-Busch InBev. These businesses are good recession-proof options.
3. Grocery and Discount Stores
During recessions, households focus on lowering their living expenses. This is often achieved by cutting back on dining out and purchasing less expensive product alternatives. As a result, grocery store spending is robust, whereas restaurant spending falls drastically.
Discount retailers also see a surge in consumer spending during recession as they provide lower-cost alternatives to regular purchases. You can invest in companies like Walmart, Amazon, Kroger, Costco, Walgreens, Target and more.
4. Healthcare and Pharmaceutical
In the most severe economic declines, the healthcare and pharmaceutical industries tend to remain recession-proof. Healthcare is critical for survival and a result, consumers will continue to spend money on good healthcare, making its demand inelastic.
However, not all healthcare and pharmaceutical businesses are created equal. When deciding where to invest in the healthcare and pharmaceutical industries, avoid firms with significant debt and cash flow concerns, as these companies are more likely to be less recession-proof. You can partner with pharmaceuticals and gene therapy CDMO to improve scalability and reduce overhead costs.
5. Death and Funeral Services
As an investor, you can buy stock in firms that make money from death-related services. These businesses supply caskets and funeral-related services, and their revenue is often recession-proof. Carriage Services, Inc. (CSV), Service Corporation International (SCI), and Matthews International Corp. (MATW) are some corporations that profit from funeral services.
Recessions herald a difficult time for many consumers and businesses. Although these investment options listed above can thrive during recessions, no industry is 100% recession-proof. However, a few are resilient during such periods and they’re the best options during economic decline.