Ever since the equities sector got off to a rotten start this year, investors everywhere have voiced concerns about an impending recession. But now, top voices are expressing their anxieties, including Treasury Secretary Janet Yellen, who conceded that she underestimated the threat of inflation. While the transparency may be noble, the admission should get people thinking about recession-proof stocks to buy right now.
Unfortunately, inflation isn’t just about higher prices at the pump or in the grocery aisle. Instead, it represents the erosion of purchasing power, a circumstance that affects everyone. Invariably, unless conditions change dramatically, companies will lose revenue from consumers tightening their belts. In turn, we could see more layoffs announced, thus incentivizing demand for the recession-proof stocks to buy.
Finally, it’s not just self-anointed gurus on YouTube that are sounding the alarm on an economic downturn. Deutsche Bank, which had previously expressed concerns about a U.S. recession, doubled down on its negative prognostication in April of this year, warning about a substantial slump.
With the Federal Reserve poised to take serious action on inflation, here are the recession-proof stocks to buy right now.
|CASY||Casey’s General Stores||$210.95|
|TPB||Turning Point Brands||$29.48|
|ESS||Essex Property Trust||$287.83|
General Mills (GIS)
Over the long run, staying in the equities sector has proven to be a winning proposition. But ahead of a potential recession, investors will likely be better served considering publicly traded companies that cater to core necessities. Under this context, General Mills (NYSE:GIS) is one of the best recession-proof stocks to buy.
Up nearly 4% on a year-to-date basis through the end of May, GIS is hardly an appealing offering. Yet it’s beating the benchmark S&P 500 index, which is down nearly 14% during the same period. Moreover, its food and snacks business, combined with some of the most recognized brands in the industry should make GIS exceptionally relevant during troubled times.
Plus, General Mills features a 2.9% dividend yield that can help take some edge off rising prices.
As of December 2021, only two states exist that don’t require holding auto insurance: Virginia and New Hampshire. But the thing is, many if not most people in those states end up buying insurance for their vehicles because of the financial protection it provides. Given these crazy times, you’re just better off having insurance, which brings up Progressive (NYSE:PGR).
In my view, PGR is a no-brainer among recession-proof stocks to buy right now because insurance is something you’re not going to mess with unless circumstances are truly dire. For relatively small cash outlays, they can truly save you during accidents and other unforeseen events.
Finally, with driving becoming hazardous during the new normal, you’re going to want to be covered.
Sempra Energy (SRE)
If you’re looking for recession-resistant stocks to buy, you don’t have to search much further than utility firms. Through provisions of power and other critical resources, the industry is indispensable. That also makes the sector vulnerable to criticisms of price gouging and other unethical behaviors. To be fair, Sempra Energy (NYSE:SRE) has courted a variety of criticisms over the years.
Nevertheless, SRE is very attractive as one of the recession-resistant stocks to buy right now. First, the company provides power to 40 million customers, representing one of the largest energy networks in North America. Second, most of the firm’s coverage area focuses on Southern California, which is intriguing due to the underlying state economy.
Basically, Sempra customers can theoretically handle the cost increases, affording Sempra some economic insulation.
Conagra Brands (CAG)
Another food-related organization, Conagra Brands (NYSE:CAG) is a packaged-goods firm, selling various grocery favorites under multiple brands. From Marie Callender’s to Hunt’s to Orville Redenbacher’s Gourmet Popping Corn, if you’ve ever cooked for yourself for some length of time, chances are, you’ve benefitted from Conagra’s business.
Moving forward, CAG should easily be one of the best recession-proof stocks to buy right now. As you’ve likely heard, consumer sentiment recently dropped to multi-year lows. This implies, among other things, that households are tightening their budgets toward discretionary (as in unnecessary) purchases. On the other hand, spending toward consumer staples should increase or at least be robust out of pure necessity.
Therefore, if you have a cynical mindset, CAG should enjoy rising demand. Conagra also pays a sizable dividend yield of 3.8%.
An American icon, PepsiCo (NASDAQ:PEP) commands significant influence, both as a blue-chip business entity and as a leader in its core junk food and beverages industry. Because of this distinct profile, PEP could be one of the better-performing recession-proof stocks to buy. On one end, you have operations tied to core necessities and on the other end, it features some sex appeal.
How so? Research demonstrates that eating triggers the release of endorphins in our brain, catalyzing feelings of pleasure and satisfaction. However, eating junk food releases more endorphins while eating healthier fare (like salads) generates less pleasure.
Now, let’s think about what a recession would do. A combination of higher prices and workforce reductions will create a depressing environment. But PepsiCo products would be available as an affordable pick-me-up. Cynical, yes, but the narrative could be quite effective.
Casey’s General Stores (CASY)
In any downturn, the natural instinct of the consumer is to reduce spending. However, what would make a future recession particularly pernicious is that households are already slashing their budget because of rising inflation. For many exciting growth-oriented businesses, the backdrop is unpleasant. But for Casey’s General Stores (NASDAQ:CASY), it might receive a massive shot of relevance.
Since the January opener, CASY is up around 6% and could be poised to swing higher. Operating more than 2,400 convenience stores, Casey’s customers look to the company to provide essential goods at reasonable prices. With many households adopting survival mode, Casey’s should enjoy sustained and robust demand.
Moreover, its concentration in Midwestern states could be an advantage. The company knows its market well and it’s not overleveraged to other regional dynamics, making it one of the more interesting recession-proof stocks to buy.
Home Depot (HD)
Under the present context, Home Depot (NYSE:HD) is a bit of a tough play when it comes to recession-proof stocks to buy. Last year, the company absolutely killed it as the housing boom saw many eager sellers (or their contractors) rush to the hardware store to buy renovation material. In addition, new homeowners had an incentive to repair abodes that required some extra attention.
This year, the narrative looks much different, with HD stock down nearly 26% YTD. Inflation pressure along with fears of a housing bubble have many folks sitting on the sidelines. That’s understandable although Home Depot could still be one of the best recession-proof stocks to buy. Regardless of the “new normal’s” unique aftershocks, people always need a reliable retailer during times of trouble.
Indeed, Home Depot stores always seem to be open during calamities, including the coronavirus pandemic. Therefore, HD could be insulated from economic shocks.
Turning Point Brands (TPB)
Not to be confused with Turning Point USA, Turning Point Brands (NYSE:TPB) is a consumer staples company, although to be fair, both entities could be considered toxic depending on your ideological frame. However, if you have a live-and-let-live attitude, TPB could be interesting as one of the recession-proof stocks to buy.
Specializing in tobacco and vaping-related products, Turning Point caters to adult liberties. In a similar approach to junk food companies, the use of tobacco creates a feel-good mood among consumers. Indeed, evidence shows that smoking releases a significant amount of endorphins, which will likely play a powerful role during a recession.
Of course, you’re dealing with addictions so Turning Point is not on the path to becoming an environmental, social and governance (ESG) play. Still, cynicism sells during a downturn so there’s that.
RCI Hospitality (RICK)
One of my favorite euphemisms in the equities market, RCI Hospitality (NASDAQ:RICK) stretches the namesake word to the absolute limit.
Cynically, RCI Hospitality caters to certain core desires. While each downturn is different, historically, this sector has performed well during recessions. It’s quite possible that a future fallout could be a boon for RICK stock.
Essentially, this sector also helps with the endorphin-releasing process, a common theme among recession-proof stocks to buy.
Essex Property Trust (ESS)
Before I get into my quick discussion for Essex Property Trust (NYSE:ESS), you should know my personal stance on real estate and the skyrocketing of core living expenses; in short, I think it’s unsustainable. Talk to me all you want about shortage this and shortage that. At the end of the day, people can’t keep paying 40% or more of their household income on rents or mortgages.
Still, some investors still believe that real estate prices could be sustainable. If that’s you, you might want to check out Essex Property Trust, which is a real estate investment trust (REIT) focusing on apartment homes. However, we’re not just talking about any old apartment complexes but properties located mostly in the southwestern coastline.
Yes, we’re talking about southern California, a perpetually hot destination state. Therefore, ESS could be one of the recession-proof stocks to buy for the economic insulation effect.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.