3 Stocks to Consider With a Possible Recession on the Table

Key Points

• Investors fearing a potential recession might turn to critical industries—waste management, healthcare supplies and pharmaceuticals, and natural gas and electric service, for example.
• RSG, MCK, and PCG are well-established firms in strong defensive industries that may offer protection during a recession.
• Nonetheless, it's important to keep in mind that predictions of a recession in 2024 did not come to pass, so there is not a guarantee of a 2025 recession until the data confirms it.

As of early March 2025, investors—and consumers—have once again begun to feel skittish about the possibility of an impending recession. At least two major factors have contributed most recently to this sentiment: first, a dreaded inverted yield curve in the final days of February, and second, the Atlanta Fed's model to predict GDP growth for the first quarter of the year was revised down to -2.8% on March 3, when it had been +4.0% about a month before.

While it will be some time before analysts can confirm (or firmly disprove) that we are in a recession, investors have taken the hint. As of March 6, 2025, the S&P 500 is more than 2% in the last five days of trading and has erased all upward progress made so far this year.

Investors should keep in mind that predictions of a recession in 2024 did not come to pass, highlighting the limitations of even the most robust models and metrics.

Still, many retail traders are seeking securities that will help weather a potential storm. Outside of assets like precious minerals, core defensive names and those offering vital products and services may be a place to start.

Waste Services: Essential and Stable

Republic Services Inc. NYSE: RSG collects, processes, and transports recyclable, solid waste, and industrial waste materials for both residential and business clients. Republic's services are essential, insulating it from potential declines in consumer spending.

Additionally, the company has been assertive in its expansion strategy, most recently through the acquisition of industrial waste and wastewater treatment services firm Shamrock Environmental.

This strategy has paid off, with the company experiencing 5.6% year-over-year (YoY) revenue growth and 16.4% net income improvement in the latest quarter. 

Further, Republic has recently improved both its net income margin and its adjusted EBITDA margin and saw a healthy adjusted free cash flow of nearly $2.2 billion in 2024.

While not a standout dividend play on its own, Republic's 0.98% dividend yield, supported by a sustainable payout ratio of 35.8%, is another element that may entice investors cautious about a potential recession. All told, RSG shares are up nearly 26% in the year ending March 4, and 10 out of 16 analysts have rated the company a Buy.

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Impressive Performance and Good Positioning in Healthcare

The healthcare sector is well-known for the benefits it offers investors during market instability—although this tends to be limited to large, well-established firms rather than small start-ups. 

McKesson Corp. NYSE: MCK fits this bill: the $80-billion pharmaceuticals and health supplies company is a major distributor to hospitals, pharmacies, and more.

McKesson has also drawn investor attention because in early March it achieved an all-time high stock price after growing more than 20% in the last year.

The company posted 18% YoY revenue improvement in the latest quarter, and executives boosted earnings guidance as well, driven by excellent performance in its pharmaceuticals and prescription technology services business.

McKesson also continues to grow, in part through strategic acquisitions. The firm's increasing reach across all aspects of the healthcare sector and its solid financial footing could insulate it from a recession. Despite its significant share price gains, the company remains popular among analysts—13 out of 15 MCK shares have a Buy rating.

Surpassing Growth Goals and Strengthening Financial Position in Utilities

Utilities firms are also a key defensive play, and PG&E Corp. NYSE: PCG stands out among competitors in this sector. Though prices have climbed for many customers, the California natural gas and electric service provider still managed to outperform its own goal of 9,000 new-service customer connections for 2024 by more than 50%.

Given the vital nature of its products, PG&E is protected from market downturns.

What's more, PG&E's financial position is increasingly strong—it reported in February 2025 that its equity needs are fully satisfied to fund its five-year capital plan of $63 billion through 2028 and that operating cash flow in 2024 of $8 billion was nearly twice that of the prior year.

Due to climate change, PG&E's California location makes it susceptible to increased wildfire risk. However, the company completed nearly 400 miles of system hardening in 2024 to protect against future damage.

This may have influenced BMO Capital Markets analysts to raise their price target for PCG shares in February and JPMorgan analysts to reaffirm their Overweight rating around the same time.