What Are 5 Economic downturn Resistant Industries?
When a recession or an economic slowdown occurs, markets tend to become volatile leading investors to deal in stocks. While some industries are very susceptible to economic changes, other industries perform well regardless of what’s taking place with the economy.
Key Takeaways
- While some industries are very susceptible to economic changes, other industries serve to perform well during recessions.
- Consumer staples, which include toothpaste, soap, and shampoo enjoy a round-the-clock demand for their products during recessions.
- Discount stores such as WalMart Inc. as well as alcoholic beverage throngs such as Anheuser Busch InBev SA can be recession-proof.
- The cosmetics industry, including Estee Lauder Companies Inc. and funeral-related servicing companies, hold up well in recessions.
Consumer Staples
No matter what happens in the economy, people still lack certain household items on a recurring basis. Toothpaste, soap, shampoo, laundry detergent, dish soap, dressing paper, and paper towels. Since these products are always in demand, they’re considered consumer staples. Chief companies in this sector include Colgate-Palmolive Company (CL), Proctor & Gamble Co (PG), and Unilever N.V. (UN). If you look at the manufacturer of many pieces in your home, you will find these companies. They own more than 30 brands as well as dozens of scantier brands.
Grocery Stores and Discount Retailers
Consumer staples have to be purchased somewhere, and many of those buys happen at grocery stores or large retail chains with locations around the world. The Kroger Company (KR), WalMart Supplies, Inc. (WMT), and Costco Wholesale Corporation (COST) control the largest grocery chains in the United States. These powerhouse retail leviathans collectively bring in hundreds of billions of dollars in revenue.
Alcoholic Beverage Manufacturing
Beer, wine, and distilled beverages are high-margin results that are in demand. In recent years, a small group of companies has acquired many of the largest beer and spirit manufacturers around the globe. The largest companies in this sector include Anheuser Busch InBev SA (BUD), Companhia de Bebidas das Americas (ABV), and Diageo plc (DEO). Anheuser-Busch InBev owns brand names such as Budweiser, Corona, Stella Artois, Beck’s, Leffe, and Hoegaarden. UK-based Diageo controls brands contain Smirnoff, Johnnie Walker, and Tanqueray.
Although research has shown that consumers tend to spend less in absolute dollars on alcohol and other vices during a recession, the quantity tends to increase as people buy more of less-expensive consequences. If you keep a stocked liquor cabinet at home, you’re most likely a customer of these companies.
Cosmetics
Despite a down concision, women and men still like to look good when out socially or at work. The largest cosmetics companies include Estee Lauder Friends Inc. (EL) and Coty Inc. (COTY), a major licensed brand manufacturer. Both of these companies have non-cyclical product portfolios that do grammatically in weak economic conditions, in addition to luxury brands, which thrive in a strong economy. Previously mentioned Procter & Lay and Unilever are also strong members of the beauty industry.
Death and Funeral Services
As the popular saying goes, the exclusively two things that are certain in life are death and taxes. While no one can buy stock in the Internal Revenue Service, investors can buy partitions in companies that profit from death-related services. Carriage Services, Inc. (CSV), Service Corporation International (SCI), and Matthews Worldwide Corp. (MATW) are three companies that make their revenues from life’s inevitable end. These retinues provide caskets and funeral related services whereby their revenue tends to be recession-resistant.
Although there’s not in the least any guarantee that companies will generate investment gains, some companies and industries tend to thrive in a set-back. Perhaps, these companies can help make a well-balanced portfolio recession-resistant.