How to protect your portfolio against the recession
But with fears of a recession due to runaway inflation and the Federal Reserve’s continued plans to raise interest rates, now may be the time for investors to find genuine “recession-proof” stocks. recession”.
Generally, stocks of electric and water utilities, consumer staples like food and beverages (alcoholic and non-alcoholic) hold up better in downturns, especially since many these stocks pay regular dividends.
Wells Fargo analysts said this week in a mid-year market report that they “now favor a full, market-weighted allocation to ‘consumer staples and utilities’ stocks because of their traditional resilience in a slowing economy”.
“Staples are hard to replace and last items on which households tend to cut back,” BNP Paribas analysts said in a report this week, adding that “a drop in demand is unlikely “despite”the magnitude of the rise in food prices”. “
Wells Fargo analysts added in their report that food and staples retailers, i.e. supermarkets, are now on their list of “favorable sub-industries” within the consumer sector in the United States. broadly “because we expect this group to benefit from an increasingly value-conscious consumer.”
Energy stocks could continue to surge
And then there is oil. Energy stocks have been the big market winners this year, largely due to the surge in crude prices that has occurred since Russia invaded Ukraine.
Despite growing fears that soaring oil and gas prices could push the economy into recession, some experts still believe energy stocks will hold up better than other parts of the market.
“Earnings in the energy sector are growing much faster than the overall valuation of the sector, so there is still plenty of potential,” David Trainer, CEO of investment research firm New Constructs, said in a report.
“We believe energy prices will remain high for the foreseeable future because demand for fossil fuels is not declining as fast as people think and alternative energy is not as available as people think,” he said. added Trainer.
So, with all due respect to the CEO of Uber, the recession-proof companies of yesteryear are likely to remain the best stocks to hold if you’re worried about a potential downturn and looking for a safe haven.