But due to the Federal Reserve’s continued plans to boost runaway inflation and interest rates, it is time for investors to look for real “backward” stocks, fearing a recession.
Typically, stocks of electric and water utilities, such as food and beverages, hold up well in declining consumer staples (both booze and non-alcoholic beverages), especially since most of those stocks pay steady dividends.
Analysts at Wells Fargo said in this week’s mid-year market report that they are now “favoring a full, market-weighted share of consumer staples and utility stocks” due to their traditional resilience in a sluggish economy.
Analysts at BNP Paribas said in a report this week that “the drop in demand is unlikely despite the expansion in food prices.” “
Wells Fargo analysts add in their report that food and staples retailers, such as supermarkets, are now on the “Consumer Sub-Enterprises” list in the broader consumer segment “because we expect this group to benefit from increasingly value-conscious consumers.”
Energy stocks may be leaking
And then there’s oil. Fuel stocks have been the biggest market winners this year due to rising crude prices since the Russian invasion of Ukraine.
Despite rising concerns about rising oil and gas prices pushing the economy into recession, some experts still think energy stocks are better than other parts of the market.
“The return on the energy sector is rising much faster than the overall valuation of the sector, so there is plenty of upside,” said David Trainor, CEO of investment research firm New Constructs.
“The demand for fossil fuels is not going down as fast as people think, and as alternative energy is not available as people think, we believe that energy prices will rise for the foreseeable future,” the coach added.
So with all due respect to the CEO of Uber, if you are worried about a potential downturn and looking for a safe haven, the old recession-proof companies are now likely to be the best stock to own.