I’ve got a lot of praise via email about my content curating, and I’ve heard many of you cite that they like the style of Matthew from The Right Trader, so I’m back again with another great video he produced about recession proof stocks. These are stocks that you can hold onto during difficult times that should hold their value. Think about things that are done when people are making tons of money, and then think of things they do when they are flat out broke. These are the types of stocks that can help you retire to Florida, versus being stuck in a cold state somewhere, so don’t discount this content.
I like to think of things like booze, cigarettes, and even adult themed content. However, I’ll let Matthew steal the show here and present to you his angles in today’s pieces on stocks to buy during a recession.
If you like this type of content, where third parties give advice on investing, you may also like to learn about The Motley Fool, one of the best stock newsletters I’ve come across.
Which Stocks are Recession Proof?
Matthew: Hey. What’s going on everyone? Matthew from therighttrader.com, back again with another stock and investing video. Today, we’re going to be talking about the best recession stocks, the stocks that are recession-proof, and even stocks that just tend to hold up very well in bad times. Those doomsday stocks, because there’s a lot of stuff going on with the virus right now. Moreover, just the economy as a whole, we’ve been seeing several years of bull market trend that has to come to an end sooner or later. We’re seeing the first signs of that as the market is now slipping into a pretty strong correction. This is today alone, a bunch of stocks in the red. Once again, especially a lot of tech stocks. We’re actually starting to see money flow into more safer stocks. Hence, the video that I’m making today.
Now, if we look at the SMP 500 ETF right now, we are moving below $300 as we speak really. Our next area of support is going to be around $230. Now, we actually could even go all the way back down to $156. That would be almost a 50% drop. I’m not saying that that is necessarily going to happen but we really haven’t came back and tested that level in a very long time. The opportunity is there for a significant drop. Already just going back down to $230 around that $200 mark, is going to be a significant pullback for the market. We’re talking about stocks falling over 30, 40, 50% and that’s going to have a huge impact. The economy could be in shambles and that’s why you want to have stocks that can hold up in times like that.
A lot of the stocks that I’m going to talk about are very diversified. They even pay dividends, so you’ll be getting payments during those tough times as well. I think you’ll be pretty impressed with the list that I’ve compiled here today. Make sure to subscribe if you haven’t already, leave a like. First up is McDonald’s, no surprise here. This is one that in the past during bad times performed extremely well. If you look back in 2008, barely even flinched. Actually, some of the first stocks that I’m going to show you here today on this list have even moved higher during the 2008 crash and during really bad times. What better is there than stocks that even increase during the tough times? McDonald’s, definitely one of them that is extremely resistant even pays a 2.5% dividend has to be included on this list.
We’ve also got Walmart. This one is actually one that increased, yes, you heard that right, it increased about 15% during the 2008 market crash. You can see the spike right over here in 2008. It did increase literally by about 15% in 2008 and that’s because if people are going through tough times, they don’t necessarily have as much money before, they might try to find cheaper alternatives and Walmart is one of the go-to places. Also pays a great dividend, so you’re getting those dividend payments during the tough times as well. Like I said, a lot of these first stocks that I’m going to show you here are just your go-tos, extremely safe in rough times. I’m not a financial advisor just my personal opinion. Please, remember to trade and invest at your own risk. In my opinion, these are stocks that are must-haves in your portfolio and especially during the tough times.
Johnson & Johnson this is a big consumer good corporation, doesn’t really fall during the tough times, even tends to increase a little bit sometimes and also pays almost a 3% dividend, very strong one as well. Now, we have PG, which is pretty much the exact same thing, consumer goods, 2.5% dividend. Also is one of those stocks that just keeps going up non-stop. Had a little bit of a drop in 2008 but recovered very quickly. Only about a 20% drop so significantly less than other companies.
Now, we’re going to start to enter into stocks that can be more looked at towards the recent virus drama that we’ve had and in a situation like that, stocks that can perform very well in an outbreak, Now, the Clorox company has performed pretty well actually. If we look at the five-day chart, it had a couple of spikes here and really this is one that some money is flowing into it, although it did drop today. If we look at the previous history extremely strong performance, 2008 barely dropped at all. Even get that 2.46% dividend during those times as well. You have to think about that.
Getting those dividends payments and having the safety of the stock not necessarily falling that much or even potentially increasing and still getting those dividends payments. You can’t ask for much better than that in times where the whole economy or most of the economy could be crumbling. Having stuff like that is a pretty big deal. That’s why we are going to talk about some stocks that tend to have a business model that always brings in money. This is one of them right here. Iron Mountain Incorporated, this is a company that I’ve talked about in my best dividend stock video. It handles destruction and storage of very confidential information for companies. It can be contracts, a whole bunch of stuff like that.
Related: How to Invest in Dividend Stocks
It handles the security and the backend in a lot of these big corporations. They will need to store important files, even during the tough times and that’s why we’ve seen even back in 2008, may have taken a little bit of a hit but overall, very steady company and this one pays a massive 7.8% dividend. Combined with the safety of the stock itself and the business model, I don’t think you can find much better than that. Even recently here, it has been holding up pretty darn well. Let’s head over to our next stock. This is going to be a stock that I’ve talked about many times. It’s one of my favorites stocks out there, Realty Income Corporation.
It’s a real estate corporation that owns a lot of rental properties, tends to rent out properties towards things like Walgreens and stuff like that. Also, a whole bunch of apartment buildings. It pays a very strong 3.72 dividend. This is actually a dividend aristocrat meaning that it’s been paying dividend for years and years and actually increases its dividend. It took a little bit of a hit in 2008 but recovered very quickly and it’s been just on a steady uptrend for years. Now, this is one of those where you’re getting monthly dividends, you heard that right. The dividend payments are monthly and that can serve as income during the tough times as well as the fact that the business model itself is very strong even if times are less good as well.
Related: Realty Income featured as a Top REIT Dividend Stock
Similarly, Gold. Gold is often seen as a safe haven and that’s why the SPDR Gold Shares is one that tracks gold. It’s currently in a cup and handle formation so we’re coming back up now as we reach that $200 mark. I think we have a pretty fair chance of moving above $200 in the future here, even pretty soon. This is one that you would probably want to have a hedge to get some gold exposure because Gold has previously even sometimes gone up during strong rough economic times. This is one of the vibrant stocks that have seen a pretty significant jump. I did want to include it. It’s been pretty steady for the last two years. It’s a really pretty new company but it seems like one of the more promising ones as far as the actual pharmaceutical stocks out there. I did want to include it.
fffNext up, a bit of a doomsday stock here is going to be Lakeland Industries. This is a producer of hazardous material equipment and protective equipment. In extreme times, they are a very valuable company and that’s why we’ve seen them increase almost 50% overnight due to the recent virus outbreak. This is a stock that tends to get these spikes which is something to pay attention to because it doesn’t typically just go on nonstop but if things are going to get tougher over the next few years, it’s a small corporation that could benefit very well from the specialty products that it has towards, like I said, industrial protective clothing and accessories. I thought that this could be one that could really grow a lot over the next few years as we may be more exposed to things like this.
The last one is a bit of a funny one. It’s Teladoc which is a stock that revolutionized the medical industry a bit. Instead of going to your typical doctor, you call into a doctor and have a call or a video call appointment with a doctor to get your prescription. If a bunch of hospitals are taken up or you just don’t want to go to the doctor, whatever the case may be, it’s actually cheaper I believe than a typical visit to the doctor. This is just one interesting for the future as well. It’s still pretty small at a nine billion dollar market cap and has just now started to take up some steam with almost a 100% increase more recently in the past year and a half. I think that this once could be a very big grower in the years to come. New, revolutionizing idea and also just now starting to pick up some steam.
That completes my list of the best recession-proof stocks for today. Let me know what stocks that you’re looking at during these tough times and where you think the market might be heading. With that being said, thank you so much for watching and have a great day. As always, don’t forget to check out my Technical Analysis Master Course. It’s the ultimate guide to technical analysis. We’ve gotten great reviews 4.2 stars out of 5. You can get the course for less than $20. It even comes with a 30-day money-back guarantee. You’ll learn how to spot buying and selling opportunities, how to read candlesticks, how to read advanced trading indicators, everything you need to know about charting and more. Also, make sure to follow me on Twitter for live market updates.
[00:10:17] [END OF AUDIO]
About Tim Schmidt
Tim Schmidt is an Entrepreneur who has covered retirement investing since 2012. He started this website to share his expertise in using his Self-Directed IRA. Most recently he's been advising individuals to diversify into precious metals ahead of a certain recession. He invested with Goldco.