Big changes may be over the horizon this November. With the wild election cycle shifting up another gear, it’s never been more important to consider adjusting one’s portfolio. That doesn’t mean investors should make wholesale changes: you never know what may happen next. Still, it makes sense to consider so-called recession-resistant stocks if you haven’t already done so.
This category of investing centers on established large-capitalization businesses. Because they’re so massive and profitable, they’re incredibly predictable. You can bank on the likelihood that over time, they will see a steady expansion of revenue and earnings. At the same time, the drawback of recession-resistant stocks is a lack of outright growth potential.
That might be a sacrifice worth making. Basically, if you have accumulated a lead late in the game, you don’t need to adopt risky defensive tactics in the hopes of turning the ball over. Instead, you just need to grind out the clock and preserve the lead. That’s what these recession-resistant stocks are designed for.
Church & Dwight (CHD)
A consumer goods giant, Church & Dwight (NYSE:CHD) is easily one of the most boring enterprises available for investment. At the same time, this characteristic makes CHD one of the recession-resistant stocks to buy. Featuring popular brands like Arm & Hammer and OxiClean, CHD aligns with products that people use every day.
Because of the predictability and consistent demand flow, investors can bet on CHD to ride out economic downturns. Recession or no recession, people need to care for their property and themselves. Sure enough, the company’s financials reflect this core directive. In the past four quarters, CHD posted an average earnings per share of 82 cents. This figure beat the consensus view of 75 cents, yielding an earnings surprise of 8.5%.
Notably, CHD stock trades hands at 4.17X trailing-year sales. That’s quite high for the underlying industry. However, it’s a modest premium over the period between the first quarter of 2023 to Q1 2024, which landed at 4.2X.
Analysts project steady expansion in the top and bottom lines over the next two years. And while not generous, it offers a forward yield of 1.13%.
Kroger (KR)
One of the biggest grocery retailers, Kroger (NYSE:KR) is supremely relevant for operating supermarkets and multidepartment stores. We all have to eat and that’s what keeps the lights on at Kroger’s. Naturally, KR makes for an enticing candidate for recession-resistant stocks. Because it runs a major grocery chain, Kroger’s is a hub for consistent, reliable demand.
Sure, economic downturns may impact the “quality” of purchases: people may opt cheaper products. However, they could also select store brands, which are often cheaper than name brands. That would likely help KR stock. In the past four quarters, Kroger posted an average EPS of $1.17, beating the collective consensus view of $1.08.
Notably, the market prices KR stock at 0.26X sales. In the past year since Q1 2024, this metric sat at 0.23X. Therefore, it’s not trading at much of a premium relative to what the market has consistently borne.
Generally, analysts see some turbulence this fiscal year. However, in the next year, earnings and sales may start moving in a positive trajectory. Additionally, Kroger’s offers a forward yield of 2.38%.
Mondelez (MDLZ)
We all love the occasional treat and that’s what makes Mondelez (NASDAQ:MDLZ) one of the compelling recession-resistant stocks. As a manufacturer of global snack products, Mondelez is perhaps best known for its Oreo brand of cookies. While such snacks might be considered discretionary, they’re also low-priced. Plus, they provide a quick pick-me-up, boosting sentiment during economic troubles.
It goes without saying that it’s unlikely consumers will engage in an abstinence program against Oreos. Humans have cravings and Mondelez satisfies at a relatively low cost. The company is also delivering the goods in the financial front. In the past four quarters, it posted an average EPS of 84 cents. This beat the consensus average of 79 cents.
Mondelez will release its fiscal Q2 earnings report next week. Based on near-term trajectories, it should be another solid beat. For the full year, analysts see EPS rising 9.1% to $3.48. On the top line, sales may reach $36.74 billion. If so, that would be a 2% improvement.
Lastly, Mondelez offers stakeholders a forward dividend yield of 2.58%. It makes an attractive case for recession-resistant stocks.
Public Service Enterprise (PEG)
A major energy firm, Public Service Enterprise (NYSE:PEG) provides electric and gas utility services. Public Service makes an obvious case for recession-resistant stocks: basically, utilities represent essentials for daily living. That’s especially the case for modern societies. You lose access to power, you are pretty much out of the loop. Therefore, I don’t expect severe volatility in PEG, even if a recession hits.
Plus, the benefit of utilities or enterprises related to this sector is the natural monopoly concept. The barriers to entry are so steep that would-be competitors don’t even try. That’s good for investors who are seeking ideas that are entrenched in key markets. It’s not all bark and no bite either. In the past year, Public posted an average EPS of 85 cents, beating the consensus view of 80 cents.
Right now, PEG stock trades at 3.69X sales. There’s no way around it – it’s overvalued. Further, the multiple sat at 2.8X in the past year. Another thing that might dissuade investors is that revenue might slip this year.
So, why bother with PEG? Experts anticipate consistent growth in the years ahead. And that means its forward yield of 3.18% is awfully attractive.
Walmart (WMT)
A big-box retailer, Walmart (NYSE:WMT) really needs no introduction. Offering a one-stop shop for consumers, people don’t need memberships to enjoy the benefits of shopping there. Instead, you just show up. Also, the company features everyday low pricing, which has led to a consistent flow of demand. Households will always need the essentials, irrespective of the economy.
That’s what makes WMT a key player among recession-resistant stocks. And even though the company is an established stalwart, it continues to pleasantly surprise the experts. In the past four quarters, the retailing giant posted an average EPS of 55 cents. This figure beat the collective consensus view of 50 cents, yielding an earnings surprise of 8.28%.
To be fair, WMT stock isn’t exactly traded at a discount at 0.87X revenue. Further, in the past year, this metric sat at 0.7X. So, it has gotten pricier, relatively speaking. Still, experts anticipate that by the end of this year, sales may rise 13.8% to $676.73 billion.
For the bottom line, EPS may rise almost 20% to $2.43. Thus, WMT belongs on your radar.
Republic Services (RSG)
When it comes to recession-resistant stocks, it’s difficult to overlook Republic Services (NYSE:RSG). As a waste management and environment services provider, Republic represents a key cog of the broader economy. You don’t really think about it on a daily basis. However, without Republic’s collection, recycling and disposal business, things will get messy in a hurry.
Plus, Republic enjoys the ultimate in natural monopolies. It’s not as if government bodies are greenlighting real estate for the purposes of developing landfills. Therefore, Republic represents an entrenched enterprise. Plus, it delivers the goods, posting an average EPS of $1.45 in the past four quarters (up to Q1). This figure beat the consensus view of $1.35.
Right now, RSG stock trade at 4.13X. That’s a bit of a premium compared to the prior year’s print of 3.47X. However, analysts are looking for continued expansion in the top and bottom lines. EPS may rise 8% this year to $6.06. Revenue could see an improvement of 7.9% to $16.15 billion.
Republic also offers a forward yield of 1.08%. It’s not much but again, you’re dealing with a predictable business.
PepsiCo (PEP)
As one of the world’s most recognizable beverage and snack brands, PepsiCo (NASDAQ:PEP) benefits from the consistency found in popular consumer goods. An economic downturn may result in a decline in sales. However, the impact shouldn’t be that terrible, relatively speaking. Also, it’s possible that sales might even rise as Pepsi steals market share from the restaurant industry.
Essentially, if the economy is performing well, people may buy the calories from eating and drinking establishments. But once a downturn materializes, that discretionary pool of money could be directed to the grocery aisles. That’s where Pepsi could come alive. So far, the financials are proving just that. In the past four quarters, it posted an average EPS of $1.95, beating the consensus view of $1.86.
Interestingly, PEP stock trade at 2.49X revenue. That’s actually lower than the price-to-sales ratio of 2.64 seen during the past year. Therefore, PEP might rise to its prior valuation.
Analysts see revenue hitting $93.88 billion this year, up 10.6% from last. Also, the company pays a generous forward dividend yield of 3.26%. It’s one of the best recession-resistant stocks to buy.
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.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.