Economic downturns are bad for most businesses. When people have less money, they spend less across the board. Right?
Well, not quite. There are a few industries that actually thrive during downturns because their business plans are meant to attract customers with lower budgets.
By learning from past recessions, we can learn some of the best industries to invest in during an economic downturn.
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- Best Industries to Invest in During an Economic Downturn
- COVID-Specific Industries to Invest In
Best Industries: Economic Downturn Investments
When people have less money, they shop at stores where they can get a lot of value. Things that people often pay extra for in better times, like health or durability, are less valued in times of economic crisis.
This category includes the obvious choices like Walmart and Dollar Tree as well as businesses that don’t explicitly advertise as budget retail but provide it anyway, like Ross or Sears.
People are going to keep getting sick, no matter what. And they won’t skimp on the medicines they need to keep feeling good. Because of this, generic medication (not the expensive varieties) are a good bet during a recession.
Examples include Johnson & Johnson or Merck.
During a downturn, people are short on time as well as money. Grabbing some fast food is both quick and cheap. As a plus for the coronavirus recession, it also eliminates the need for a trip to the grocery store.
Examples include Mcdonald’s (MCD) and Burger King (BKW).
People need to eat, and farms are where almost all the food they consume gets started. Agriculture is a solid investment anytime, and it won’t be negatively affected by a downturn.
Famous examples include Corteva (CTVA) and Monsanto (BAYN).
Plots of forest are one of those commodities that grow more valuable over time because trees get more valuable as they grow! You can invest in forest land for next to nothing now, and flip it after the recession for a considerable profit.
Examples of forestry stocks to invest in include Trex (TREX) and Pope Resources (POPE).
When people are on a budget, they build things instead of buying them new. They also repair their broken items instead of replacing them. Because of this, companies that produce materials for do-it-yourself projects are great places to invest during a downturn.
Examples include Bed Bath & Beyond (BBBY) and Micheal’s (MIK).
Many people feel safer converting their cash holdings to precious metals such as gold during downturns because they prefer to have the actual physical value rather than promissory notes for it (which is what money is, after all). If lots of people are buying precious metals, their stock rises.
Some good precious metals companies to invest in are Barrick Gold (GOLD) and Silvercorp (SVM).
“Sin industries” are alcohol, tobacco, gambling, and now (in most states) you can count in cannabis.
During hard times, people like to use these intoxicating activities as an escape, so they fly off the shelves more quickly.
Examples include Boston Beer (SAM), Altria (MO), and Las Vegas Sands (LVS).
Utilities (electricity, water, etc.) are basically recession-proof because people will use them even if they’re just scraping by.
Good utility stocks to invest in include NRG Energy (NRG) and PPL Corp (PPL).
Waste Management is always a good sector to invest in because people still keep producing trash no matter what. During downturns, people stay home even more and so usually produce even more waste than usual.
Some good waste management stocks to invest in are Republic Services (RSG) and the aptly-named Waste Management (WM).
Art is another commodity that ages like a fine wine. The older it is, the more valuable it often is. It’s an excellent idea to buy art rather than stocks for your portfolio during a downturn.
And speaking of wine, we’re going to include that here because it’s a good area to invest in for precisely the same reason.
COVID-Specific Industries to Invest In:
These are some industries experts predict will gain value in the current downturn.
So many people are seeking out healthcare consultations these days that most hospitals are jammed up. So instead, people are utilizing “telecare” companies like Teledoc Health (TDOC) and Humana (HUM).
As you’re probably aware, more and more companies are allowing their employees to work from home as the quarantine stretches on. Platforms like Slack (WORK) and (ZOOM) have already shot up in value, and they are predicted to continue on that trajectory. Invest now.
There are several substantial medical science companies working on a treatment for coronavirus, and the one that discovers it first will absolutely shoot through the roof in value. Picking the winner is not exactly likely. But at that point, being an investor will be like winning the lottery.
A few companies working on treatments include CytoDyn (CYDY) and Gilead Sciences (GILD).
For obvious reasons, people are keeping their surroundings more hygienic nowadays by buying lots of cleaning and personal sanitation products.
Examples like Clorox (CLX) and Church & Dwight (CHD) are a safe bet for investment right now.
People don’t want to go to stores if they can help it, so online shopping hubs like Amazon (AMZN) and Alibaba (BABA) are great investments.
The stocks discussed above are by no means guaranteed, but they’re as close as you’ll ever come in the stock market.
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