3 Recession-Resistant Stocks I’m Happily Buying & Holding

September 26, 2022

These 3 stocks held up great through the Global Financial Crisis of 2008, and they’re poised to do well through this next recession.

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Today we’ll be taking a deep dive into 3 recession-resistant companies I own.

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3 Recession-Resistant Stocks I’m Happily Buying & Holding

Highlights

  • The Federal Reserve has made inflation public enemy #1, and will raise rates until we’re back down to 2% annual inflation.

  • Major indicies are down and I’m buying and holding these 3 recession-resistant stocks.

The Recession

It looks like the bear market is back in full force after the July-August rally has swiftly died out. The major U.S. indices Fell quite a bit this week after Federal Chairman Jerome Powell announced a 75 point interest rate hike. The Dow Jones fell 3.99%, the S&P 500 fell 4.64% and the Nasdaq 100 fell 5.07%. On one hand it hurts to see your portfolio down by 1,000s in one day but on the other hand, here’s where the real wealth is made. If you’re an investor in the accumulation phase like me, you should be LOVING these lower prices.

I admit it is a bit scary to watch these red days go by but to be a successful investor requires this one mental shift: wealth is built on red days and in bear markets. J.P. Morgan famously said, “In bear markets, stocks return to their rightful owners,” and what we’re seeing on these red days is exactly that. This is a transfer of wealth from the impatient to the patient.

As with any economic cycle, there are stocks that hold up better in recessions than others. I’ll be sharing 3 stocks that I believe will hold up well during the coming recession, just as they did during the 2008 Global Financial Crisis.

Stock #1: McDonald’s (MCD)

McDonald’s is one business that has outlived plenty of recessions. During the Global Financial Crisis of 2008, the S&P 500 tumbled 51% from highs whereas McDonald’s only fell 31.6%.

Its low cost meals are especially popular during recessions and their locations are usually in the best & most trafficked areas of town. If you’re not familiar, McDonald’s actually makes the bulk of its revenue from real estate, not food sales. Of its 36,000+ restaurants only 5% of them are company-managed, leaving the rest to be ran by franchisees. These franchisees pay a $45,000 franchise fee to start, monthly rent and 4% of monthly profits. These diversified revenue streams, prime locations, and low-cost menu options put McDonald’s in a place to succeed during a recession.

Stock #2: Altria Group (MO)

Altria Group is one of the world’s biggest suppliers of smoke and smoke-free tobacco products. They hold up better than most companies in recessions as tobacco products are some of the last goods to be given up by consumers. During the Global Financial Crisis of 2008, Altria only fell 23% compared to the S&P 500’s 51% fall. I’m adding to Altria with the goal of reaching 100 shares so I can sell covered calls weekly. Altria has demonstrated 52 years of dividend growth and pays out a juicy 9.02% dividend yield.

Stock #3: Costco (COST)

Costco has proved time and time again that it’s one of the best run business in America. It’s especially successful in recessions because of their ultra-low prices and bulk offerings. Consumers flock to Costco in droves and willingly renew their memberships at a 95% rate. Costco investors were expecting a membership raise this week but the CFO has came out and said there’s no plans to do so at this time time. Good to know that Costco has that as a weapon if need be. Costco also has room to expand their international presence which will bring great growth in my opinion.

When you look at how Costco stock performed during the GFC of 2008, it drew down 23.98% as opposed to the S&P 500’s 51% decline. I’m holding Costco and adding to my position as often as I can. The company has shown immense dividend growth for the past 18 years and has even rewarded shareholders with special dividends along the way.

Final Thoughts

As economic growth likely slows in the coming months due to increasing interest rates, I’m happy to be buying and holding MCD, MO & COST. These companies have withstood multiple recessions and have raised their dividends through it all. I don’t see demand waning for any of these 3 companies and I look forward to accumulating great businesses at a discount during this economic downturn.

Memes Of The Week

LinkedIn never ceases to amaze me😂 Dude basically said, “The Queen is down but I’m up 😤💯”

Happy Fall y’all, I think Dr. Parik Patel is onto something 🤔

Lastly, who is this helping? Who asked for this? I want a name.

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Helpful Resources Are Here!

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