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3 Top Recession-Proof Stocks Likely to Rally in 2023
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A hawkish Federal Reserve along with a fresh batch of disappointing economic reports heightened fears of an imminent recession. The Fed categorically mentioned that market pundits shouldn’t expect the central bank to halt interest rate increases anytime soon since more work needs to be done to curb inflation, which is running close to a 40-year high.
The Fed acknowledged that the pace of increase in U.S. consumer prices may have slowed down in November, but it’s still way more than the central bank’s target range. In fact, the central bank, this week, hiked interest rate by 0.50 percentage points following a slew of four successive three-quarter point rate increases this year in an attempt to slow inflation.
However, such monetary tightening measures increased auto loans, variable-rate loans, and the cost of credit cards, something that doesn’t bode well for the economy.
What’s more, the Fed is only keen to alter its monetary policy stance if inflation declines in a sustainable fashion, which looks like a distant dream as of now. That means consumers’ propensity to spend will decline over the course of time, eventually tipping the economy into a recession.
Consumers, in reality, have already started to spend less. Last month, sales at U.S. retailers declined 0.6% compared to the prior month, its biggest decline in 2022, per the Commerce Department. At the same time, the Federal Reserve Bank of Philadelphia said that manufacturing activity in its region contracted more than anticipated.
Thus, with budget-conscious shoppers curtailing holiday-related purchases and manufacturing activity weakening, the economy has started to show signs of slowing down and stocks have begun to plummet. The Dow finished its worst day in the last three months on Dec 15, while the broader S&P 500 and the tech-laden Nasdaq too stretched their December losses.
Investors, however, shouldn’t freak out! Despite a broader market selloff, there are stocks that tend to do well during economic downturns. Notable among them are defensive stocks. Their business performances aren’t correlated with happenings in the larger market, or in other words, they are non-cyclical in nature.
Prominent among them are utilities and consumer staple companies. The demand for their products and services remains unperturbed by market volatility. And why not? Utilities include gas, water, and electricity, which are undoubtedly essentials. Staples, on the other hand, mostly includes food companies whose demand continues to remain unaltered under any circumstances.
We have, thus, selected three stocks from the aforesaid areas whose defensive nature makes them recession-proof. These stocks presently flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
NextEra Energy (NEE - Free Report) is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy. The premier U.S. utility service provider’s strong investment plan and adequate liquidity will boost its performance in the near future.
NextEra Energy, currently, has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 13.7%. It’s projected earnings growth rate for the next year is 8.3%.
Alliant Energy (LNT - Free Report) is a holding company with subsidiaries engaged in regulated electric and natural gas services. Alliant Energy’s earnings prospects look bright, thanks to its investments in renewable energy assets and expanding customer base.
Alliant Energy, at present, has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 6.8%. It’s projected earnings growth rate for the next year is 3.6%.
The Chef's Warehouse (CHEF - Free Report) is a distributor of specialty food products in the United States. It also offers cooking oils, butter, eggs, milk, and flour.
The Chef's Warehouse, at the present time, has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 10.3% over the past 60 days. The company’s expected earnings growth rate for the current year is a whopping 3,100%. It’s projected earnings growth rate for the next year is 10%.
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3 Top Recession-Proof Stocks Likely to Rally in 2023
A hawkish Federal Reserve along with a fresh batch of disappointing economic reports heightened fears of an imminent recession. The Fed categorically mentioned that market pundits shouldn’t expect the central bank to halt interest rate increases anytime soon since more work needs to be done to curb inflation, which is running close to a 40-year high.
The Fed acknowledged that the pace of increase in U.S. consumer prices may have slowed down in November, but it’s still way more than the central bank’s target range. In fact, the central bank, this week, hiked interest rate by 0.50 percentage points following a slew of four successive three-quarter point rate increases this year in an attempt to slow inflation.
However, such monetary tightening measures increased auto loans, variable-rate loans, and the cost of credit cards, something that doesn’t bode well for the economy.
What’s more, the Fed is only keen to alter its monetary policy stance if inflation declines in a sustainable fashion, which looks like a distant dream as of now. That means consumers’ propensity to spend will decline over the course of time, eventually tipping the economy into a recession.
Consumers, in reality, have already started to spend less. Last month, sales at U.S. retailers declined 0.6% compared to the prior month, its biggest decline in 2022, per the Commerce Department. At the same time, the Federal Reserve Bank of Philadelphia said that manufacturing activity in its region contracted more than anticipated.
Thus, with budget-conscious shoppers curtailing holiday-related purchases and manufacturing activity weakening, the economy has started to show signs of slowing down and stocks have begun to plummet. The Dow finished its worst day in the last three months on Dec 15, while the broader S&P 500 and the tech-laden Nasdaq too stretched their December losses.
Investors, however, shouldn’t freak out! Despite a broader market selloff, there are stocks that tend to do well during economic downturns. Notable among them are defensive stocks. Their business performances aren’t correlated with happenings in the larger market, or in other words, they are non-cyclical in nature.
Prominent among them are utilities and consumer staple companies. The demand for their products and services remains unperturbed by market volatility. And why not? Utilities include gas, water, and electricity, which are undoubtedly essentials. Staples, on the other hand, mostly includes food companies whose demand continues to remain unaltered under any circumstances.
We have, thus, selected three stocks from the aforesaid areas whose defensive nature makes them recession-proof. These stocks presently flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
NextEra Energy (NEE - Free Report) is a public utility holding company engaged in the generation, transmission, distribution, and sale of electric energy. The premier U.S. utility service provider’s strong investment plan and adequate liquidity will boost its performance in the near future.
NextEra Energy, currently, has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 13.7%. It’s projected earnings growth rate for the next year is 8.3%.
Alliant Energy (LNT - Free Report) is a holding company with subsidiaries engaged in regulated electric and natural gas services. Alliant Energy’s earnings prospects look bright, thanks to its investments in renewable energy assets and expanding customer base.
Alliant Energy, at present, has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 0.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 6.8%. It’s projected earnings growth rate for the next year is 3.6%.
The Chef's Warehouse (CHEF - Free Report) is a distributor of specialty food products in the United States. It also offers cooking oils, butter, eggs, milk, and flour.
The Chef's Warehouse, at the present time, has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings has moved up 10.3% over the past 60 days. The company’s expected earnings growth rate for the current year is a whopping 3,100%. It’s projected earnings growth rate for the next year is 10%.