The Economy and Recession-Proof Stocks
The economy goes through cycles of expansion and contraction, with recessions being periods of contraction. During recessions, traditional portfolios may not perform well, and riskier investments like tech stocks and cryptocurrencies tend to suffer the most. To balance your portfolio during a recession, it’s wise to consider adding stocks that are less negatively affected.
Recession-Proof Stock 1: PepsiCo Inc.
PepsiCo Inc. is a major global beverage and snack company with a diverse product portfolio. It includes popular brands like Pepsi, Gatorade, Lay’s, Doritos, Tropicana, and Quaker Oats. PepsiCo currently offers a 2.74% annual dividend yield and has shown strong growth in its Q2 earnings report. The company projects organic revenue growth of 10% and earnings per share growth of 12% by 2023. Chairman and CEO Ramon Laguarta emphasized the company’s focus on productivity initiatives and investments in innovation, brand building, digitalization, and sustainability. Analyst consensus at TipRanks is a ‘moderate buy’ for PepsiCo with an average target price of $204 in the next 12 months.
Recession-Proof Stock 2: Johnson & Johnson
Johnson & Johnson is a multinational healthcare company involved in research, development, manufacturing, and sale of healthcare products. With a dividend yield of 2.75%, the company’s Q2 earnings report exceeded expectations. Revenue was up 3.2% from the previous quarter and 5.5% compared to the same quarter last year, indicating demand for its innovative drugs. Johnson & Johnson also has promising drugs in its pipeline, which should contribute to future revenue and growth. Despite these positive factors, analyst consensus remains a ‘moderate buy’ with an average price target of $182, representing a 5% gain from the current price of $173.
Closing Thoughts
Both PepsiCo and Johnson & Johnson have underperformed the S&P 500’s return this year, but their stability during recessions makes them attractive options. Adding recession-proof stocks like these can help balance your portfolio and mitigate risk during economic downturns. However, it’s important to note that investing always carries some level of risk, and it’s advisable to do thorough research and consult with a financial advisor before making any investment decisions.
By
By