A recession is a period of temporary economic decline defined by a reduction in trade and industrial activity. Economists generally “call" a recession after gross domestic product (GDP) falls for two consecutive quarters.
During a recession, many companies report a decline in earnings. This pushes down the price of stocks, particularly growth stocks. However, when growth-oriented stocks decline, value-oriented stocks rise. And as investors shift from growth to value, the stocks of these companies tend to rise to the top.
What qualities make up a recession-proof stock? These are companies that make products and/or services that are always in demand. Consumer staples, healthcare, and utilities stocks are examples of recession-proof stocks.
Many recession-proof stocks also have a low beta value. During a bull market these stocks are not likely to outperform the broader market. But that means during a recession, these stocks will not drop as far. And because many of these stocks pay a dividend, many investors can get a positive total return in their portfolio by reinvesting those dividends.
Here are seven recession-proof stocks that you should consider adding to your portfolio. Not only are they solid defensive choices, but they can also offer a little growth in the best of times.
Click the "Continue to Slide #1" button to view the first company.
