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Stocks to Combat Recession Worries

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  • (1:00) - Will There Be A Recession and When?
  • (8:50) - When Should You Be Paying Attention To The Market Inversions? 
  • (13:20) - Could We Expect An Inflation In The United States?
  • (16:35) - What Could Send The Economy Into A Recession?
  • (19:10) - Stocks To Watch In The Current Market Environment 
  • (29:00) - Episode Roundup: NSC, UTX, CBRE, ANET, FSUGY, SHECY
  •                 Podcast@Zacks.com

 

Welcome to Episode #172 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Zacks Chief Equity Strategist, John Blank, to talk about their favorite topic: is the US economy in a recession?

And if so, how do you invest for it?

Tracey and John first covered this subject all the way back in Episode #20 of the podcast, in February 2016, which was titled “Why There Won’t Be a Recession in 2016.”

And, actually, there wasn’t.

Signs of a Recession

But it’s worth looking, again, at what is one of the most important indicators of a recession: employment.

For the week ending March 30, the jobless claims fell 10,000 to 202,000, which was back to a 49-year low.

The March employment report also showed unemployment unchanged at 3.8%.

Additionally, Bank of America announced that it was raising its minimum wage to $17, with it rising to $20 an hour, by 2021.

That’s a sign that the job market remains tight. Companies don’t raise wages to be nice.

Conclusion?

The United States isn’t in a recession.

So why is everyone so nervous about one?

Stocks for a Recession

It doesn’t hurt for investors to be prepared as a recession is, ultimately, inevitable.

1.       United Technologies (UTX - Free Report) is planning on splitting into three companies by 2020 with Otis and Carrier being separated during that time. In the meantime, the shares are underperforming the S&P 500 and a have a forward P/E of 16.9.

2.       Norfolk Southern (NSC - Free Report) is busting out to 5-year highs but earnings are expected to be up 9.3% in 2019 and another 14.7% in 2020 for this railroad. The rails may be old school but investors have been cashing in.

3.       Arista Networks (ANET - Free Report) which provides software driven cloud networking, has been a big momentum stock in 2019. Shares are up 51% year-to-date. It’s not cheap, with a forward P/E of 34, but you’re buying the growth story.

4.       Fortescue Metals Group (FSUGY - Free Report) is an Australian iron ore company. It’s trading at just 11.6x earnings even though shares have soared 96% year-to-date. As China’s growth ramps back up, the Australian commodity plays should benefit.

5.       Shin-Etsu Chemical (SHECY - Free Report) is the 9th largest chemical company in Japan. One of its specialties is chip chemicals. Shares are up 21% year-to-date.

What else should you know about investing for a possible recession?

Tune into this week’s podcast to find out.

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