During a market slump, consider these conservative investments.
Investors are fearful that a U.S. recession is approaching due to aggressive Federal Reserve interest rate rises, economic stress from the Ukraine crisis, and stubbornly high inflation. When the US economy collapses, even the most prestigious stocks are pulled down with it. However, during the previous two U.S. recessions, in 2008 and 2020, there were a few stocks that outperformed the S&P 500. These recession-resistant stocks could also help you play defense in the 2022 bear market. Here are seven stocks recommended by CFRA Research analysts that outperformed the S&P 500 in both 2008 and 2020.
Walmart Inc. (ticker: WMT)
It’s no surprise that bargain retailer Walmart outperformed throughout the last two recessions. When circumstances are difficult, Americans cannot go without groceries, but they may save money by bargain shopping at Walmart. Walmart has struggled with excess inventory and cost inflation in recent quarters, according to analyst Arun Sundaram, but the company’s evolving business model, which includes initiatives in e-commerce, technology, and automation, makes it an excellent long-term investment. He expects Walmart’s earnings to grow faster and more consistently in the coming years. WMT stock, which closed at $140.73 on Oct. 27, has a “buy” rating and a $154 price target from CFRA.
Abbott Laboratories (ABT)
Abbott Laboratories is a multi-product health care firm. It’s apparent why many health-care firms profited during the 2020 pandemic, but Abbott’s stock outperformed by an even greater amount in 2008. According to analyst Paige Meyer, Abbott’s stock will outperform peers in the long run due to its growing market share, strong balance sheet, and track record of dividend increases. Meyer believes Abbott’s diverse portfolio of innovative products will assist the company in overcoming declining COVID-19 testing demand and generating impressive revenue growth. ABT stock, which closed at $96.93 on Oct. 27, has a “buy” rating and a $123 price target from CFRA.
Home Depot, Inc. (HD)
Interest rates are usually one of the first things the Federal Reserve does when there is a recession. Low mortgage rates, along with a shortage of entertainment and leisure activities amid social distancing, sparked a house and home repair boom in 2020. According to analyst Kenneth Leon, a housing crisis in the United States has helped Home Depot and caused an increase in home renovation projects as families decide to stay there due to a lack of reasonably priced homes. According to Leon, supply chain interruptions remain a risk, but Home Depot is experiencing excellent sales growth across the board. HD stock, which closed at $291.06 on Oct. 27, has a “buy” rating and a $365 price target from CFRA.
Synopsys, Inc. (SNPS):
Engineers can use Synopsys to create and test semiconductor devices and other software applications. Because the global semiconductor industry is anticipated to be a long-term growth sector, demand for chip-testing and design services is consistent, even during a recession. According to analyst John Freeman, Synopsys has improved fundamentals and an appealing value. He claims that Synopsys has tremendous pricing power in its electronic design automation sector and that growing semiconductor design complexity benefits the company. Over the next three years, Freeman anticipates an 18% increase in yearly income. SNPS stock, which closed at $289.19 on Oct. 27, has a “strong buy” rating and a $514 price target from CFRA.
Accenture PLC (ACN):
Accenture is a multinational provider of information technology services. North America accounts for about half of the company’s revenue, with Europe accounting for roughly a third and the rest coming from other regions of the world. Accenture’s diverse consulting and services business has proven to be recession resistant in the past and will most likely continue to do so in the future. Accenture has a resilient client base, a solid balance sheet, and a long track record of above-average earnings growth, according to analyst David Holt, making it an excellent defensive investment. ACN stock, which closed at $278.84 on Oct. 27, has a “buy” rating and a $333 price target from CFRA.
T-Mobile US Inc. (TMUS)
T-Mobile is currently the second-largest wireless operator in the United States by subscriber market share, following its merger with Sprint. T-Mobile has consistently grown in a difficult sector, even through economic downturns. According to analyst Keith Snyder, T-Mobile will continue to outpace competitors in the coming years. Early Mobile’s 5G network rollout puts it at least a year ahead of AT&T Inc. (T) and Verizon Communications Inc. (VZ). He claims that T-Mobile has used its 5G lead to aggressively price plans in order to gain market share in a highly competitive market. CFRA rates TMUS stock as a “strong buy” with a $170 price target. The stock closed at $140.63 on Oct. 27.
Walt Disney Co. (DIS)
Walt Disney is one of the world’s largest and most diverse media and entertainment conglomerates. This diversity has allowed Disney’s company to stay in high demand throughout a variety of economic scenarios, including a global pandemic. Even after Disney’s theme parks, cruise line, and film and television studios were closed down in 2020, Disney+ streaming subscriptions increased. According to Leon, Disney is the streaming-video market leader due to its unrivalled content library and ability to bundle and cross-sell its Disney+, Hulu, and ESPN+ services. DIS stock, which closed at $104.44 on Oct. 27, has a “buy” rating and a $120 price target from CFRA.
7 stocks that outperform during a downturn:
- Walmart, Inc. (WMT),
- Abbott Laboratories (ABT), and
- Home Depot, Inc. (HD) Synopsys, Inc. (SNPS) and
- Accenture PLC (ACN)
- T-Mobile US Inc. (TMUS)
- Walt Disney Co. (DIS)
