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Recession Proof Stocks – 9 That Thrive During Market Pandemonium

Ryan Carey
April 14, 2020

With COVID-19 sending the economy into limbo, investors are buried in one of the shakiest situations foreseeable seen since the Great Recession.

The stock market doesn’t thrive on fear and uncertainty. For weeks, Wall Street analysts have seen the bulk of large-cap stocks take a nosedive. 

So where do we turn in this time to economic turmoil? What stocks can we safely add to our portfolio to weather the storm? 

In this article, we'll show you: 

  • 9 Cheap Recession Proof Stocks and How to Identify Them

  • What types of Stocks are Recession Proof? 

  • Best Alternative to Recession Proof Stocks

Let's dive in! 

stock trading on a laptop, defensive stocks here

9 Cheap Recession Proof Stocks and How to Identify Them

 Luckily, there are lots of investments gutsy investors can make to protect themselves from  the market deterioration and chaos the world is experiencing at the moment.

Activities such as buying gold and penny stocks have been shown to pay off even in the most volatile economic situations.

Ideally, you should be looking to identify these kinds of businesses and make your investment before the increasing demand sparks off a surge in prices.

These businesses allow you to make good in the market while at the same time ensuring you retain your investment dollars for when the disarray is gone and markets are back to normal.

1. Wal-Mart

Wal-Mat is one of the most popular recession proof stocks on the market. The store was one of only two companies that recorded an increase in share prices in 2008. The other one was McDonald’s, which is next on our list.

2. McDonalds

Despite the recent rapid decline due to COVID-19, I suspect the short-term volatility in with McDonalds stock to progress. However, investors with a two-to-three-year horizon may consider further dips as opportunity to buy into the shares.

Focus on long term capital exposure for this one right now. A stock like McDonalds will aways stand the test of time. 

McDonald’s recorded a strong growth of 26% in earnings per share in the 2008 recession, and remains one of the safest stocks to invest in during volatile economic periods.

3. Verizon (VZ)

Verizon is a telecommunication company with over 100 million wireless retail subscriptions, 6 million Fios internet subscriptions, and more than 4 million Fios video subscriptions.

The company is also involved in media businesses, but the bulk of its sales revenue comes from wireless operations.

Its 4G LTE network can be accessed by 98 percent of the US population, making it the country’s largest wireless service provider.

4. General Mills

General Mills is a highly profitable fast-food company whose products include Pillsbury, Crocker, Progresso, and Betty.

Just like most other established brands in the food industry, the company is highly stable and has guaranteed shareholders dividend payments since 1925.

5. Consolidated Edison

Utilities make for the best performers during recessions, and Consolidated Edison sits at the top of the pile with more than 3 million customers.

6. Hormel Foods

With brands such as Skippy, Dinty Moore, Jennie-O, and Spam under its name, Hormel has made a name for itself as a master of acquisitions.

The company has increased its dividends for more than 50 years in a row, with its 2016 increase being a 17 percent raise.

7. Coca Cola

Coca-Cola is the most popular beverage manufacturer in the world and is present in over 200 countries.

While soda sales may have taken a hit over the past few years, the company’s dividend has increased for 55 years straight, surviving several economic turbulence periods along the way.

8. PepsiCo

Just like Coca-Cola, almost everyone in the world knows about Pepsico. The beverage company has diversification as its main selling point and is involved in the food business as well. Its dividend has increased for 45 years straight.

9. AT&T

Now more than ever, people will still pay for TV, internet services, and wireless cellular.

AT&T operates mainly in the US and Mexico and is considered a Dividend Aristocrat having raised its dividend for more than 25 years in a row.

How many times have you thought about digging into your emergency fund to sink that money into a stock like that above?

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What types of Stocks are Recession Proof? 

Some of the industries that have shown to remain unaffected in economic recessions include infrastructure, resource commodities, low-cost businesses, utilities, military equipment, and healthcare. Here is a more in-depth breakdown of each:

types of stocks are recession proof are those that thrive in economic downturns

Resource Commodities

Precious metals remain among the most reliable investment complexes during times of bad stock market situations. In fact, some gold companies have been shown to spike dramatically over the past couple of months, with silver, gold, and platinum prices remaining high.

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Healthcare

The big picture isn’t really a factor when medicine is integral to an individual’s well-being or comfort.

Regardless of the situation of the stock markets or the economy in general, people will continue seeking medical treatment, and pharmaceutical companies will remain as active as ever.

Medical devices will still be required in hospitals, and people will continue going to doctors for routine checkups, diagnoses, dosage renewals, treatment of infectious diseases, and other procedures.

Utilities

Utilities are not good for you if you are looking for recession proof stocks that will make you rich overnight.

They DO however, pay good dividends and hold their value even if every other stock around them plummets suddenly.

Information technology (IT)

The digital migration of the past couple of years has transformed how we interact and go about our daily lives. The dependency on gadgets is expected to grow over the next few years, and communication companies such as AT&T are expected to develop some kind of immunity to future economic recessions.

Military equipment and technologies

Today’s governments are obsessed with military might, and not even bad economic times would make the US cut back on its expenditure on weapons.

Even politicians tend to avoid this topic during campaigns in a bid to shun ruffling feathers.

Military-related industries are thus fairly stable and are almost bound to survive mild to moderate recessions.

Best Alternative to Recession Proof Stocks

best investments besides recession proof stocks


1. Invest in real estate

Recessions may be a nightmare to homeowners, but they are a market gap for real estate investors.

Most investors buy investment properties during a recession when the prices are low, rent them out to reliable tenants, then put them up for sale when prices are back to normal.

2. Buy gold.

Gold IRA comes with diversification benefits.

It is also immune to inflation as its value goes up faster than the rate of inflation.

During the 2008 recession, both Silver and Gold moved up quickly with people dreading the prospect of banks printing too much money and causing hyperinflation.

This fear will always be there, and you can use it to your advantage by purchasing gold early in a crisis and selling it at the peak of the recession. That said, ensure you do business with the best gold IRA company you know for better deals and smooth transactions.

3. Invest in penny stocks.

Although most people don’t know how to make money with penny stocks, this system has been around for years and has mainly been practiced during economic recessions.

Penny stocks are basically shares valued at $5 or below floated by small companies in the stock market.

They have been shown to yield huge profits within short periods, but you need to be extremely careful when choosing a company to invest in.

Conclusion

Economic recessions are a nightmare to regular investors, but the smart ones see it as an opportunity to make a profit and appraise their skills.

The above stocks are an excellent place to start if you have stalled while looking for a less risky investment opportunity ahead our current market turmoil. 

Ensure you understand each of the opportunities properly before making a choice and committing.

Also, consider learning how to buy gold and penny stocks, in case you find these investments more suitable for you.

About the author 

Ryan Carey

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