3 Recession-Proof Stocks to Add to Your Worry-Free Buy List


  • These companies are outperforming their peers based on top and bottom-line performance.
  • McDonald’s (MCD): MCD derived a considerable increase in consolidated revenues, with strong EPS growth.
  • Coca-Cola (KO): KO attained solid organic revenue growth and an increase in comparable EPS, indicating market expansion.
  • Dollar General (DG): Despite higher costs, DG’s improved inventory management maintains an operational edge.
Recession-Proof Stocks - 3 Recession-Proof Stocks to Add to Your Worry-Free Buy List

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Here are three promising recession-proof stocks with solid financial and strategic outcomes. These businesses appeal to investors looking for stability and development potential because they show resilience and strategic insight in handling economic constraints. Even in a challenging economic climate, their capacity to adjust to changing market conditions, carry out cost-cutting initiatives and promote revenue development puts them in a strong position for long-term leadership.

McDonald’s (MCD)

McDonald's restaurant in Thailand.
Source: Tama2u / Shutterstock

McDonald’s (NYSE:MCD) demonstrated robust performance in Q1 2024, with a consolidated top-line of nearly $6 billion. This marks a 5% increase year-over-year, while operating income also indicated a significant uplift of 8%. After subtracting restructuring expenses, the rise was 2%, and the company’s diluted EPS increased 9% to $2.66, reflecting a solid bottom-line. When restructuring expenses were excluded, the EPS increased by 2% to $ 2.70. 

Additionally, McDonald’s has been proactive in its strategic initiatives, investing in key areas such as new restaurant creation, technological advancements and transformation of global business services. Despite economic challenges, the company remains committed to steady development, with an investment plan focused on efficiency and innovation. McDonald’s is well-positioned to achieve its objectives and maintain consistency by leveraging its extensive geographical reach and system-wide alignment.

Finally, with plans to expand to 50K locations by 2027 and a presence in over 100 countries, McDonald’s global reach is unparalleled. This secures it as one of the best recession-proof stocks currently available.

Coca-Cola (KO)

Coca-Cola Consolidated sign outside of their building. COKE Stock.
Source: Jonathan Weiss / Shutterstock

In Q1 2024, Coca-Cola (NYSE:KOsaw a 1% increase in unit case volume. This gradual expansion is vital. It demonstrates the company’s capacity to increase its market share in intense competition and challenging market conditions. In Africa, volume momentum is still present, suggesting that consumption and market penetration are trending positively.

Further, the refranchising of bottling operations and robust top-line growth were the main drivers of the 0.6% rise in the comparable operating margin. This growth demonstrates Coca-Cola’s operational initiatives’ effectiveness and its capacity for cost control. 

Additionally, Coca-Cola had a 7% increase in comparable EPS growth despite a 9% currency disadvantage. A similar EPS of 72 cents demonstrated the company’s capacity to produce steady earnings. Organic revenue increased by 11% due to a 13% increase in price/mix. This rapid expansion signifies Coca-Cola’s potent price leverage and capacity to boost the top line without depending exclusively on volume growth.

Lastly, the company’s net revenues increased by 3% year-over-year to $11.3 billion. Hence, this revenue increase demonstrates the success of Coca-Cola’s market execution and strategic efforts.

Dollar General (DG)

The front of a Dollar General (DG Stock) store on a sunny day.
Source: Jonathan Weiss / Shutterstock.com

In Q1 2023, Dollar General (NYSE:DG) greatly improved its inventory management, lowering its overall goods stocks by 5.5% to $6.9 billion and 9.5% per store. In particular, non-consumable inventory dropped by 19.1%, suggesting more targeted and effective inventory management. Lower inventory levels lower shrink risk and free up cash flow.

Moreover, to address shrink, the corporation has conducted strong shrink reduction initiatives, moving about 12K outlets away from self-checkout. With notable gains predicted in 2025, these measures should reduce shrinkage in Q2 2024 significantly.

Further, in Q1 2024, gross profit as a proportion of sales was 30.2%, down from 31.6% the previous year. Increased shrink, higher markdowns and a larger share of sales from the consumable category were the main causes of this reduction. However, by reducing the LIFO provision, the corporation has lessened some of these effects.

Finally, about 75% of Americans live five miles or less from one of the company’s storefronts. Therefore, the company’s broad global reach is a key competitive advantage that helps it take up a sizable portion of the market.

On the date of publication, Yiannis Zourmpanos did not hold (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.

Yiannis Zourmpanos is the founder of Yiazou Capital Research, a stock-market research platform designed to elevate the due diligence process through in-depth business analysis.

Article printed from InvestorPlace Media, https://investorplace.com/2024/06/3-recession-proof-stocks-to-add-to-your-worry-free-buy-list/.

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