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3 Recession-Proof Stocks to Buy for the Second Half of 2023
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The U.S. economy expanded in the first quarter and is expected to grow again in the second quarter. However, a prominent index has been signaling recession for months, while recently, an inverted yield curve confirmed that economic growth might shrink soon.
This calls for investing in recession-proof stocks like Atmos Energy (ATO - Free Report) , Conagra Brands (CAG - Free Report) and Krispy Kreme (DNUT - Free Report) for steady returns.
Leading Economic Index Yet Again Declines
The Leading Economic Index (LEI), tracked by the Conference Board, declined by 0.7% to a reading of 106.7 in May, following a drop of 0.6% in April. The LEI has now registered its 14th successive monthly decline, signaling an impending economic slump.
The LEI, incidentally, declined by 4.3% from November 2022 to May 2023, a steeper decline compared to the drop of 3.8% between May 2022 and November 2022, pointing toward weaker economic activity soon.
The Conference Board’s, Senior Manager, Justyna Zabinska-La Monica, said that the economy is expected to contract from the beginning of the third quarter of this year to the first three-month period of 2024. She believes that lower government outlays and tightening monetary policy will likely lead to a recession.
Yield-Curve Inversion Signals Economic Downturn
Last week, the U.S. government’s borrowing costs for the short term surpassed their long-term counterparts, and the gap is quickly approaching the record touched during the banking turmoil in March.
On Jun 21, the 2-year Treasury yield was at 4.74%, while the yield for the 10-year Treasury came in at 3.78%, resulting in an inverted yield curve. Needless to say, inverted yield curve situations have always preceded a recession in the last five decades.
An inverted yield curve leads to a worsening credit condition, leading to an imminent recession. The inversion deepened as the Federal Reserve continues to stay hawkish. The central bank’s tightening monetary policy to curb inflation will eventually raise borrowing costs, and deter economic growth.
Lest we forget, Fed Chair Jerome Powell confirmed that it’s imperative to hike interest rates this year to bring down price pressures. He acknowledged that even if inflation has moderated, it remains above the Fed’s target of 2% (read more: 3 Top Bank Stocks to Gain as Powell Stays Hawkish).
3 Recession-Proof Stocks to Buy Now
With threats of a recession looming, it’s judicious for investors to place bets on stocks that are unfazed by economic downturn-led market gyrations. These recession-proof stocks mostly belong to the utilities and consumer staple sectors since the demand for their products like water, gas, electricity, food, and personal care products remains unaltered in any economic situation.
We have, thus, selected three stocks from the aforesaid areas that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Atmos Energy is engaged in the regulated natural gas distribution and storage business. Atmos Energy, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 0.5% over the past 60 days. ATO’s expected earnings growth rate for the current year is 7.7%.
Conagra Brands is one of the leading branded food companies in North America. Conagra Brands, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its next-year earnings has moved up 0.7% over the past 60 days. CAG’s expected earnings growth rate for the current year is nearly 17%.
Krispy Kreme operates as a branded retailer and wholesaler of doughnuts, coffee, and other complementary beverages and treats, and packaged sweets. Krispy Kreme, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its next-year earnings has moved up 2.4% over the past 60 days. DNUT’s expected earnings growth rate for the current year is 13.8%.
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3 Recession-Proof Stocks to Buy for the Second Half of 2023
The U.S. economy expanded in the first quarter and is expected to grow again in the second quarter. However, a prominent index has been signaling recession for months, while recently, an inverted yield curve confirmed that economic growth might shrink soon.
This calls for investing in recession-proof stocks like Atmos Energy (ATO - Free Report) , Conagra Brands (CAG - Free Report) and Krispy Kreme (DNUT - Free Report) for steady returns.
Leading Economic Index Yet Again Declines
The Leading Economic Index (LEI), tracked by the Conference Board, declined by 0.7% to a reading of 106.7 in May, following a drop of 0.6% in April. The LEI has now registered its 14th successive monthly decline, signaling an impending economic slump.
The LEI, incidentally, declined by 4.3% from November 2022 to May 2023, a steeper decline compared to the drop of 3.8% between May 2022 and November 2022, pointing toward weaker economic activity soon.
The Conference Board’s, Senior Manager, Justyna Zabinska-La Monica, said that the economy is expected to contract from the beginning of the third quarter of this year to the first three-month period of 2024. She believes that lower government outlays and tightening monetary policy will likely lead to a recession.
Yield-Curve Inversion Signals Economic Downturn
Last week, the U.S. government’s borrowing costs for the short term surpassed their long-term counterparts, and the gap is quickly approaching the record touched during the banking turmoil in March.
On Jun 21, the 2-year Treasury yield was at 4.74%, while the yield for the 10-year Treasury came in at 3.78%, resulting in an inverted yield curve. Needless to say, inverted yield curve situations have always preceded a recession in the last five decades.
An inverted yield curve leads to a worsening credit condition, leading to an imminent recession. The inversion deepened as the Federal Reserve continues to stay hawkish. The central bank’s tightening monetary policy to curb inflation will eventually raise borrowing costs, and deter economic growth.
Lest we forget, Fed Chair Jerome Powell confirmed that it’s imperative to hike interest rates this year to bring down price pressures. He acknowledged that even if inflation has moderated, it remains above the Fed’s target of 2% (read more: 3 Top Bank Stocks to Gain as Powell Stays Hawkish).
3 Recession-Proof Stocks to Buy Now
With threats of a recession looming, it’s judicious for investors to place bets on stocks that are unfazed by economic downturn-led market gyrations. These recession-proof stocks mostly belong to the utilities and consumer staple sectors since the demand for their products like water, gas, electricity, food, and personal care products remains unaltered in any economic situation.
We have, thus, selected three stocks from the aforesaid areas that flaunt a Zacks Rank #1 (Strong Buy) or 2 (Buy). The search was also narrowed down with a VGM Score of A or B. Here V stands for Value, G for Growth, and M for Momentum; the score is a weighted combination of these three metrics. Such a score allows you to eliminate the negative aspects of stocks and select winners. You can see the complete list of today’s Zacks #1 Rank stocks here.
Atmos Energy is engaged in the regulated natural gas distribution and storage business. Atmos Energy, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its current-year earnings has moved up 0.5% over the past 60 days. ATO’s expected earnings growth rate for the current year is 7.7%.
Conagra Brands is one of the leading branded food companies in North America. Conagra Brands, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its next-year earnings has moved up 0.7% over the past 60 days. CAG’s expected earnings growth rate for the current year is nearly 17%.
Krispy Kreme operates as a branded retailer and wholesaler of doughnuts, coffee, and other complementary beverages and treats, and packaged sweets. Krispy Kreme, currently, has a Zacks Rank #2 and a VGM Score of B.
The Zacks Consensus Estimate for its next-year earnings has moved up 2.4% over the past 60 days. DNUT’s expected earnings growth rate for the current year is 13.8%.