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Markets are worried about a potential recession in 2023, but investors must remember that a recession doesn’t impact every sector and company equally. Market volatility will be a regular feature in case of a downturn. Still, you can shield your portfolio from it by investing in traditionally held firm stocks during previous downturns. Here are ten recession proof stocks for 2023.
Top 10 Best Recession Proof Stocks You Need to Invest in 2023
Here are the Top Recession Proof Stocks for 2023
The world’s largest retailer is known for its bargains. And bargain-hunting will only go up during a recession. Customers will likely continue to make a beeline to its approximately 10,500 stores. Many of its sales come from groceries, and people will continue to buy them, especially if offered at a discount. The company reported its numbers for Q3 2022. The revenue growth came in at 8.7% to touch $152.8 billion. The key highlight was its e-commerce sales growth of 16% and global ad sales business going up 40%. Q3 numbers would beat analyst expectations handsomely, even if the company posted a loss of around $1.8 billion. The company has raised full-year guidance based on its Q3 performance. It expects consolidated net sales growth of about 5.5%. It said, “The company’s guidance assumes a generally stable consumer in the US, continued pressure from inflation, and a mix of products and formats globally.
If you had invested $1,000 in Costco stock five years ago, it would be worth $3,099 today. The store has grown at a CAGR (Compounded Annual Growth Rate) of 25.40%. The company reported its numbers for October 2022 recently. Net sales came in at $17.73 billion, up 7.7% from $16.47 billion in October 2021. For the nine weeks that ended October 30, 2022, net sales were $39.19 billion, up 9% from $35.97 billion in the same period last year. The company operates 842 warehouse stores across 14 countries, including 26 new stores it opened in 2022. Recession or not, people will continue to shop at Costco.
Recession or not, people will still head to CVS Health’s chain of drugstores to refill their prescriptions and purchase their medicines. The company’s Q3 earnings report beat analyst estimates handsomely, but the stock could face several headwinds. First up is a loss of Centene’s pharmacy-services business, which is expected to cost CVS Health around $2 billion in 2024. The second is that the company will start paying its $5 billion over ten years from 2023. That said, CVS raised its full-year 2022 Adjusted EPS guidance range to $8.55 to $8.65 from $8.40 to $8.60. It has also increased cash flow guidance for 2022 by a billion dollars, in the $13.5 billion – $14.5 billion range.
The Procter & Gamble Company
A recession will cause people to tighten their purse strings, but they can never be so tight as to exclude P&G products. The company’s paper towels, shaving razors, diapers, tampons, detergents, and many other products are sold in 170 countries. They have brought in over $59 billion in revenue in the first three quarters of 2022. They are an essential services company, and its products will continue to sell despite a slowdown. The stock has a forward dividend yield of 2.51%.
Who wants to talk about garbage collection and recycling? This is one of the most boring stocks on this or any other list until you look at its financials. The company has beaten analysts’ EPS estimates for three straight quarters. Waste Management has a 25% market share in its business, and people are unlikely to change their waste management service provider. This has helped Waste Management increase its core price (fees and surcharges) from 4.6% in Q3 2021 to 8.2% in Q3 2022. The company is North America’s largest waste management service provider, and the recession will hardly affect its business.
Brookefield Infrastructure Partners
This company owns utilities around the world: Electricity transmission in Australia and Brazil, natural gas pipelines in North and South America, and India. It also owns and operates data businesses and oil and natural gas transport and midstream businesses. It recently signed an agreement with Intel to construct two new fabrication factories. It’s into a bunch of companies that will continue “business as usual” even during a recession. It helps that 90% of its cash flow comes from long-term contracts. It also pays out a healthy dividend yield of 3.8%. It has a dividend payout ratio of 60-70%, which ensures that it has a decent amount to fund its operations.
Enbridge owns and operates pipelines across Canada and the United States for transporting crude oil, natural gas, and natural gas liquids. The company has the most comprehensive pipeline system in the North American region. Its stock has risen 6.4% compared to Dow Jones’ -6.12% in 2022 as of November 25. It’s a great source of passive income when you factor in its 6.25% forward dividend yield. It didn’t slow down its dividend payout even during the pandemic, and that’s saying something! While the company is an old-energy business player, the share of renewable energy in its portfolio has gone up to 4%. It’s an intelligent play considering the world is moving away from fossil fuels.
There is a reason why McDonald’s is trading at or near its all-time highs. It is one of the most recession-proof stocks out there. Its franchisees operate globally, and its food is affordable. This is one of the few restaurants where no one qualms about entering. Its audience cuts across age groups and socio-economic status. Global comparable sales for Q3 2022 increased by nearly 10%, with growth across all segments. It’s a Dividend Aristocrat and declared a 10% increase in its quarterly cash dividend to $1.52 per share.
This is one of the largest home improvement companies in the US. Many players in the real estate sector are afraid that higher interest rates will negatively impact the housing industry. Home sales for October 2022 fell 5.9% to a seasonally adjusted annual rate of 4.43 million, the lowest level since December 2011 (barring the beginning of the COVID pandemic). In the latest earnings call, Lowe’s CEO Marvin Ellison said, “As low housing supply and high-interest rates make moving less desirable, homeowners are motivated to invest in their current homes to fit their needs. This is one of the key reasons that home improvement can win in markets when housing turnover is strong and when it slows.” Lowe’s also has a dividend history stretching back to 1961, when it became a public company. It pays a dividend of $4.2 annually or 2%.
As blue chip companies go, Coca-Cola is one of the bluest. The company chugs on, powered by the sodas, juices, and other beverages it sells. Together, they account for $42 billion in trailing 12-month revenue. In 2022, Coca-Cola shares gained 5.14% at the close of day on November 23 compared to the S&P 500, which lost 16.5% during the same period. The stock is also Warren Buffett’s longest-held investment. The company has a forward dividend yield of 2.84% and a dividend streak stretching back six decades. The company has been through multiple recessions and always finds a way to thrive. This stock is a no-brainer recession stock.
Before you go…
Finding recession proof stocks is just one part to protect yourself for a prolonged recession. It’s super important to educate yourself and understand how the markets work and where things are shifting. This is where a valuable community of like-minded traders can help you make the right decisions at the right time. Check out this next article on the best stock trading and investing chat rooms. Ranked Top 17 Best Stock Trading Chat Rooms Right Now in 2023
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