8 stocks you'll wish you own when the recession hits

8 stocks you'll wish you own when the recession hits

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Recessions aren't fun to live through. But if you're prepared, they don't have to be painful for your S&P 500 portfolio, either. ↑ X NOW PLAYING Indexes Erase Powell Gains; United Rentals, UnitedHealth, Exxon Mobil In Focus Eight stocks in the S&P 500, including information technology plays F5 (FFIV) and TYLER TECHNOLOGIES (TYL) plus consumer discretionary AUTOZONE (AZO), all soared 30% or more during the past three recessions on average since 2000 to beat the S&P 500 every time, says an Investor's Business Daily analysis of data from S&P Global Market Intelligence, CFRA and MarketSmith. These stocks gained nearly 43% on average during the past three recessions. That's pretty impressive if you consider the S&P 500 itself sank nearly 19% during the same time periods. If you're not thinking about recession, it's time. All the signs are ripe. A recession is a period of two back-to-back drops in GDP. Today inversion of the bond yield is a screaming warning of a recession. "The yield curve appears unrelenting in its call for a recession in 2023," said Quincy Krosby of LPL Financial. As is the Fed that's hellbent on slowing the economy. Even corporate CEOs see trouble ahead. Could the 14th recession since 1945 be near? "The Fed's actions to reduce inflation will continue to dampen the economy. Depending on how hard higher rates bite, we could see a recession in 2023," said Brad McMillan, Chief Investment Officer for Commonwealth Financial Network. The question is where to put your money. S&P 500 SECTORS THAT SURVIVE RECESSION It's tempting to assume all S&P 500 stocks tank in recession. But that's simply not true, says CFRA Strategist Sam Stovall. Amazingly, the S&P 500 itself actually rose 1%, on average, during all recessionary periods going back to 1945, Stovall found. How is this possible? Investors typically dump stocks before a recession actually starts. But even if you go back to 1990, where trading is more correlated with economic cycles, the S&P 500 only dropped 8.8% on average. And if you're looking for places to hide out, there are two S&P 500 sectors that gained during the recessions since 1990. Those are health care, which rose 1.8% on average, and consumer staples, which added 0.4%, Stovall found. Home improvement retail is the best sub-industry to be in during tough times. It gained 14.8% on average. But metal and glass containers plus footwear aren't bad either, rising 13.3% and 12%, respectively. BEST AND WORST SECTOR DURING RECESSIONS SECTOR % CH. IN RECESSIONS SINCE 1990 RELATED ETF SYMBOL YTD % CH. Health Care 1.8% Health Care Select Sector SPDR (XLV) -1.8% Consumer Staples 0.4% Consumer Staples Select Sector SPDR (XLP) -1.2% Nasdaq -3.0% Invesco QQQ Trust, Series 1 (QQQ) -27.7% S&P 500 Growth -4.8% SPDR Portfolio S&P 500 Growth (SPYG) -25.7% Information Technology -5.0% Technology Select Sector SPDR (XLK) -23.5% Consumer Discretionary -5.0% Consumer Discretionary Select Sector SPDR (XLY) -30.7% Materials -8.5% Materials Select Sector SPDR (XLB) -9.4% S&P 500 -8.8% SPDR S&P 500 ETF Trust (SPY) -15.9% S&P MidCap 400 -12.2% SPDR S&P MidCap 400 ETF Trust (MDY) -11.5% S&P 500 Value -12.8% SPDR Portfolio S&P 500 Value (SPYV) -4.8% S&P SmallCap 600 -12.9% SPDR S&P 600 Small Cap (SLY) -13.3% Communication Services -13.4% Communication Services Select Sector SPDR (XLC) -34.2% Industrials -14.9% Industrial Select Sector SPDR (XLI) -4.9% Utilities -16.5% Utilities Select Sector SPDR (XLU) -1.4% Energy -16.8% Energy Select Sector SPDR (XLE) 57.8% Financials -17.1% Financial Select Sector SPDR (XLF) -10.3% Real Estate -30.8% Real Estate Select Sector SPDR (XLRE) -26.1% SOURCES: CFRA, S&P GLOBAL MARKET INTELLIGENCE TECH STOCKS THAT THRIVE IN RECESSION? Some individual S&P 500 stocks hold up well in recessions, too. If you're not just looking to endure a recession, but to make money, you'll want to look at cloud security firm F5. Shares rocketed more than 77% during the past three recessions. And the stock can do even better still when the economy sputters. Shares rocketed nearly 190% during the eight-month recession that finally ended in November 2001. That tops the S&P 500's 8.2% drop during that time. Although, it's important to note the brunt of the S&P 500's drop around the time of the recession was 57%, Stovall says. Keep in mind, too, the stock is struggling this year so far. It's down more than 38%. Another big winner in the past three recessions is another information technology firm: Tyler Technologies. The company makes management software for the public sector. Shares jumped more than 63.6%, on average, during the past three recessions. But like F5, shares are struggling this year: down 39.9%. DRIVING RECESSION GAINS But at least one champion recession stock, car parts seller AutoZone, is thriving already this year. Shares are up nearly 21% this year as consumers buy parts to keep their older cars running. The stock has boomed more than 63%, on average, in the past three recessions. That's the No. 2 showing of any current S&P 500 stocks. To be sure, the S&P 500 makes its biggest drop ahead of the start of recession. The S&P 500 fell anywhere from 7% to 57% in the roughly seven months prior to previous recessions, Stovall said. And if recession comes, don't assume the Fed will bail your stocks out. "The risks that the Fed might need to do more remain elevated and that is why this economy needs to head to a recession," said Oanda's Edward Moya. "This next recession however won't be rescued by quick Fed easing or a fiscal response as that will fuel inflation risks." ​ ​ ​ ​ ​ RECESSION-BEATING S&P 500 STOCKS _During past three recessions since 2000_ COMPANY SYMBOL AVERAGE STOCK % CH. LAST THREE RECESSIONS SECTOR F5 (FFIV) 77.7% Information Technology AutoZone (AZO) 63.6 Consumer Discretionary Tyler Technologies (TYL) 48.9 Information Technology Gilead Sciences (GILD) 46.4 Health Care EQT (EQT) 39.8 Energy Tractor Supply (TSCO) 36.8 Consumer Discretionary ANSYS (ANSS) 32.6 Information Technology O'Reilly Automotive (ORLY) 31.2 Consumer Discretionary SOURCES: IBD, S&P GLOBAL MARKET INTELLIGENCE

Recessions aren't fun to live through. But if you're prepared, they don't have to be painful for your S&P 500 portfolio, either. ↑ X NOW PLAYING Indexes Erase Powell


Gains; United Rentals, UnitedHealth, Exxon Mobil In Focus Eight stocks in the S&P 500, including information technology plays F5 (FFIV) and TYLER TECHNOLOGIES (TYL) plus consumer


discretionary AUTOZONE (AZO), all soared 30% or more during the past three recessions on average since 2000 to beat the S&P 500 every time, says an Investor's Business Daily


analysis of data from S&P Global Market Intelligence, CFRA and MarketSmith. These stocks gained nearly 43% on average during the past three recessions. That's pretty impressive if


you consider the S&P 500 itself sank nearly 19% during the same time periods. If you're not thinking about recession, it's time. All the signs are ripe. A recession is a period


of two back-to-back drops in GDP. Today inversion of the bond yield is a screaming warning of a recession. "The yield curve appears unrelenting in its call for a recession in


2023," said Quincy Krosby of LPL Financial. As is the Fed that's hellbent on slowing the economy. Even corporate CEOs see trouble ahead. Could the 14th recession since 1945 be


near? "The Fed's actions to reduce inflation will continue to dampen the economy. Depending on how hard higher rates bite, we could see a recession in 2023," said Brad


McMillan, Chief Investment Officer for Commonwealth Financial Network. The question is where to put your money. S&P 500 SECTORS THAT SURVIVE RECESSION It's tempting to assume all


S&P 500 stocks tank in recession. But that's simply not true, says CFRA Strategist Sam Stovall. Amazingly, the S&P 500 itself actually rose 1%, on average, during all


recessionary periods going back to 1945, Stovall found. How is this possible? Investors typically dump stocks before a recession actually starts. But even if you go back to 1990, where


trading is more correlated with economic cycles, the S&P 500 only dropped 8.8% on average. And if you're looking for places to hide out, there are two S&P 500 sectors that


gained during the recessions since 1990. Those are health care, which rose 1.8% on average, and consumer staples, which added 0.4%, Stovall found. Home improvement retail is the best


sub-industry to be in during tough times. It gained 14.8% on average. But metal and glass containers plus footwear aren't bad either, rising 13.3% and 12%, respectively. BEST AND WORST


SECTOR DURING RECESSIONS SECTOR % CH. IN RECESSIONS SINCE 1990 RELATED ETF SYMBOL YTD % CH. Health Care 1.8% Health Care Select Sector SPDR (XLV) -1.8% Consumer Staples 0.4% Consumer Staples


Select Sector SPDR (XLP) -1.2% Nasdaq -3.0% Invesco QQQ Trust, Series 1 (QQQ) -27.7% S&P 500 Growth -4.8% SPDR Portfolio S&P 500 Growth (SPYG) -25.7% Information Technology -5.0%


Technology Select Sector SPDR (XLK) -23.5% Consumer Discretionary -5.0% Consumer Discretionary Select Sector SPDR (XLY) -30.7% Materials -8.5% Materials Select Sector SPDR (XLB) -9.4%


S&P 500 -8.8% SPDR S&P 500 ETF Trust (SPY) -15.9% S&P MidCap 400 -12.2% SPDR S&P MidCap 400 ETF Trust (MDY) -11.5% S&P 500 Value -12.8% SPDR Portfolio S&P 500 Value


(SPYV) -4.8% S&P SmallCap 600 -12.9% SPDR S&P 600 Small Cap (SLY) -13.3% Communication Services -13.4% Communication Services Select Sector SPDR (XLC) -34.2% Industrials -14.9%


Industrial Select Sector SPDR (XLI) -4.9% Utilities -16.5% Utilities Select Sector SPDR (XLU) -1.4% Energy -16.8% Energy Select Sector SPDR (XLE) 57.8% Financials -17.1% Financial Select


Sector SPDR (XLF) -10.3% Real Estate -30.8% Real Estate Select Sector SPDR (XLRE) -26.1% SOURCES: CFRA, S&P GLOBAL MARKET INTELLIGENCE TECH STOCKS THAT THRIVE IN RECESSION? Some


individual S&P 500 stocks hold up well in recessions, too. If you're not just looking to endure a recession, but to make money, you'll want to look at cloud security firm F5.


Shares rocketed more than 77% during the past three recessions. And the stock can do even better still when the economy sputters. Shares rocketed nearly 190% during the eight-month recession


that finally ended in November 2001. That tops the S&P 500's 8.2% drop during that time. Although, it's important to note the brunt of the S&P 500's drop around the


time of the recession was 57%, Stovall says. Keep in mind, too, the stock is struggling this year so far. It's down more than 38%. Another big winner in the past three recessions is


another information technology firm: Tyler Technologies. The company makes management software for the public sector. Shares jumped more than 63.6%, on average, during the past three


recessions. But like F5, shares are struggling this year: down 39.9%. DRIVING RECESSION GAINS But at least one champion recession stock, car parts seller AutoZone, is thriving already this


year. Shares are up nearly 21% this year as consumers buy parts to keep their older cars running. The stock has boomed more than 63%, on average, in the past three recessions. That's


the No. 2 showing of any current S&P 500 stocks. To be sure, the S&P 500 makes its biggest drop ahead of the start of recession. The S&P 500 fell anywhere from 7% to 57% in the


roughly seven months prior to previous recessions, Stovall said. And if recession comes, don't assume the Fed will bail your stocks out. "The risks that the Fed might need to do


more remain elevated and that is why this economy needs to head to a recession," said Oanda's Edward Moya. "This next recession however won't be rescued by quick Fed


easing or a fiscal response as that will fuel inflation risks." ​ ​ ​ ​ ​ RECESSION-BEATING S&P 500 STOCKS _During past three recessions since 2000_ COMPANY SYMBOL AVERAGE STOCK %


CH. LAST THREE RECESSIONS SECTOR F5 (FFIV) 77.7% Information Technology AutoZone (AZO) 63.6 Consumer Discretionary Tyler Technologies (TYL) 48.9 Information Technology Gilead Sciences (GILD)


46.4 Health Care EQT (EQT) 39.8 Energy Tractor Supply (TSCO) 36.8 Consumer Discretionary ANSYS (ANSS) 32.6 Information Technology O'Reilly Automotive (ORLY) 31.2 Consumer Discretionary


SOURCES: IBD, S&P GLOBAL MARKET INTELLIGENCE