During times of economic uncertainty and recession, many investors turn to defensive stocks that can provide stability amidst market volatility. However, growth stocks in industries resilient to downturns can also present lucrative opportunities.
Here are some of the best recession-proof growth stocks to consider adding to your portfolio:
The healthcare industry tends to be recession-resistant as the demand for medical services, pharmaceuticals, and medical devices remains high regardless of economic conditions. Strong growth stocks in this sector include:
UnitedHealth Group (UNH) – The largest healthcare company in the US focusing on health insurance and pharmacy benefit services. UnitedHealth has increased its dividend for over 25 consecutive years.
Eli Lilly (LLY) – A leading pharmaceutical company with a strong drug pipeline and portfolio of patent-protected medicines. Lilly has paid dividends for over 130 years and has raised its dividend for 7 consecutive years.
Intuitive Surgical (ISRG) – A pioneer in robotic-assisted surgery systems and instruments for minimally invasive procedures. Intuitive Surgical has grown revenues at a 20% CAGR over the past decade.
Consumer staples companies produce essential items like food, beverages, household goods that enjoy steady demand even during downturns. Notable recession-resilient growth stocks include:
Costco (COST) – The world’s second largest retailer providing members access to consumer staples in bulk. Costco has grown its membership base to over 118 million households worldwide.
Monster Beverage (MNST) – A leading producer of energy drinks with strong branding and international growth. Monster has increased net sales at a 10% CAGR since 2016.
Procter & Gamble (PG) – A diversified consumer packaged goods company behind trusted brands like Tide, Gillette, Pampers. P&G has paid a dividend for 130 consecutive years and has raised it for 66 straight years.
Certain IT companies providing essential software, cloud, and cybersecurity services tend to fare better during recessions. Top growth stocks include:
Microsoft (MSFT) – The world’s largest software company that is a leader in cloud services like Azure and Office 365. Microsoft has grown revenues by over 14% annually over the past 5 years.
Palo Alto Networks (PANW) – The global leader in cybersecurity solutions. Palo Alto Networks has increased revenues at a CAGR of over 25% in the past decade.
Adobe (ADBE) – Provider of ubiquitous creative software and cloud solutions like Photoshop and Adobe Document Cloud. Adobe has grown earnings by over 30% annually for the past 5 years.
While consumers cut back on discretionary purchases in a recession, certain resilient brands in categories like discount retail and home improvement may continue to thrive:
Dollar General (DG) – Largest small-box discount retailer with over 18,000 stores providing affordable necessities. Dollar General has grown earnings by over 20% annually since 2016.
Home Depot (HD) – Leading home improvement retailer benefitting from demand for home projects and repairs. Home Depot has increased its dividend for over 10 consecutive years.
With the right mix of defensive and growth stocks, investors can build a resilient portfolio to navigate an economic downturn. Conduct thorough research and add companies with strong fundamentals poised to deliver growth over the long-term.
by Steve Macalbry
Disclaimer: This article is intended for informational purposes only. It should not be considered financial or investment advice. The author does not hold any form of equity in the securities mentioned in this article. Always consult with a certified financial professional before making any financial decisions.