In this article, we will take a detailed look at the best economic recovery stocks to buy.
Economic cycles, as defined by economists, alternate between periods of growth, peak, recession, and recovery, depending on the stage that a country’s economy is at. In particular, the term “economic recovery” describes the period that follows a recession and is characterized by improving employment, increased business activity and investment, rising consumer confidence, and accelerating GDP growth. Recoveries usually start after governments enact fiscal and monetary policies to stimulate investment and spending – the primary stimulative instrument in the US has been the FED funds rate. When an economic recovery kicks in, the sectors that tend to outperform are the cyclical ones – consumer discretionary, industrial, financial, and technology – driven by both a recovery in the previously depressed valuations as well as by broad acceleration in growth.
Another important consideration for investors is that the stock market and the economy do not move in sync; the former tends to be a forward-looking animal, meaning that stock prices tend to rise in anticipation of an economic recovery, while the actual economic conditions may still be depressed and reflect low GDP growth, high unemployment and sluggish private spending. Consequently, the key takeaway for readers is that investments in economic recovery stocks shall be made during peak uncertainty and pain, at or near a market bottom when everyone is fearful and reluctant to buy. As the legendary Warren Buffet has put it,
“Be fearful when others are greedy and be greedy when others are fearful.”
READ ALSO: 11 Best Counter Cyclical Stocks to Buy According to Analysts.
The US economy and stock market are the most developed in the world and often reflect textbook examples of economic cycles. The previous unofficial recession in the US occurred in 2022, when the GDP growth posted 2 quarters of negative growth amid a sharp increase in interest rates to combat rising inflation. The stock market moved in sync with the economy during that year. The following year, 2023, resembled a slow recovery fueled by the emergence of the AI megatrend as well as strong public spending on infrastructure and other large projects. Calendar 2024 and early 2025 resembled an economic peak, as growth moderated and private spending became weaker. In such moments, even the slightest economic headwind and/or uncertainty can trigger a recession and a broad market meltdown. That’s exactly what happened with the new Trump 2.0 administration, which brought plenty of uncertainty related to tariffs and sharp cuts in the public sector.
While most investors are currently concerned about declining stock prices (the main US stock market benchmark is down over 11% at the time of this write-up since its February peak), the smart money is already looking for signals of a potential recovery. Atlanta Fed projects that the US economy posted negative real GDP growth in Q1 2025, estimated at -2.4%; given the uncertainty and tariff threats persisting in April as well, chances are that Q2 2025 will be in negative territory as well, which would mark an official recession. The problem is that the stock market already prices in such a scenario, which makes it difficult to exploit or hedge against. The only plausible move at the moment is to look for economic recovery stocks in an attempt to time the market bottom. We believe there are solid reasons to believe that the stock market bottomed out in early April and that things will only improve going forward.
The most important signal in favor of a potential economic recovery ahead is that Trump’s tariffs proliferate as a short-term negotiation tool only, which seems to work well in relation to most trading partners. On April 9, Trump announced a 90-day pause in new tariffs for 75 countries until negotiations to discuss potential solutions are arranged. Here’s how Kevin Breuninger, a CNBC journalist, commented the following on the recent developments:
The White House is clarifying that Trump’s announcement of a 90-day tariff “pause” means that the “tariff level will be brought down to a universal 10% tariff” during that time, while “negotiations are ongoing.” That respite does not apply to China, which will see U.S. tariffs on its goods rise to 125%.
We see this announcement as a sign that chances are high that the US will reach a positive agreement with the 75 countries mentioned. While the situation with China is still intense, things could deescalate if other countries reach agreements with the US and set the stage for China as well. In this context, if the tariffs saga is successfully navigated, the main headwind for the economy will dissipate, potentially triggering a broad economic recovery that would push stock prices higher. With that being said, we may currently be at an opportune moment to pick the best economic recovery stocks, which we discuss below.
Our Methodology
We used a screener to identify stocks with at least a 20% revenue compounded annual growth rate (CAGR) in the last 5 years. Then, we selected the top 10 stocks with the largest estimated average analysts’ upside and included them in the article in ascending order. For each stock, we also include the number of hedge funds that own the stock as of Q4 2024. The stocks are ranked according to the upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10. TD SYNNEX Corporation (NYSE:SNX)
Estimated average analysts’ upside: 43.06%
Revenue CAGR last 5 years: 26.68%
Number of Hedge Fund Holders: 33
TD SYNNEX Corporation (NYSE:SNX) is a leading global distributor and solutions aggregator for the IT ecosystem, which offers a comprehensive portfolio of IT products and solutions, including hardware, software, and services. The company’s IT solutions are designed for value-added resellers, system integrators, and managed service providers to analyze their own data and better monetize their products (boost profitability through getting new clients, cross-selling opportunities, or cutting costs). SNX is well-positioned to capitalize on increased IT spending during periods of low interest rates and economic recovery, making it a potentially attractive investment in such times.
TD SYNNEX Corporation (NYSE:SNX) reported strong momentum across the business in the latest Q1 2025, with gross billings growing 7.5% YoY and 9.5% in constant currency. The Advanced Solutions segment grew by 7% YoY, reflecting continued demand for integrated IT solutions, while Endpoint Solutions grew by 8%, with growth across PCs and mobile. The company’s strategic technologies, including cloud, cybersecurity, data and analytics, and Hyve, achieved double-digit growth across all geographic segments.
However, Hyve’s performance was below expectations due to component shipment delays and demand shortfalls, which management said may persist for a few quarters. Despite these temporary challenges, TD SYNNEX Corporation (NYSE:SNX) maintained its fiscal 2025 commitment to mid-single-digit gross billings growth and generated $1.1 billion of free cash flow. The company’s end-to-end strategy, global reach, and specialist go-to-market approach continue to enable it to capture a wide range of IT spend, with expansion to 30,000 active partners and 500,000 end users transacting through their cloud marketplace. SNX has demonstrated strong execution and the ability to grow all its products, even during uncertain times. This makes it one of the best recovery stocks to own if economic fundamentals improve.
9. Ingersoll Rand Inc. (NYSE:IR)
Estimated average analysts’ upside: 44.15%
Revenue CAGR last 5 years: 25.60%
Number of Hedge Fund Holders: 39
Ingersoll Rand Inc. (NYSE:IR) is a provider of industrial solutions, offering a diverse range of products such as air and gas compressors, pumps, vacuum systems, and power tools for the industrial and life sciences markets. The company’s competitive advantage is based on a strong scale and global presence, which allows it to be a reliable supplier to companies relying on customized products and parts. IR is one of the best economic recovery stocks to consider, as it has a proven history of thriving during periods when industrial activity and capital expenditures are accelerating. The US-based company ranked tenth on our recent list of 12 High Growth Non-Tech Stocks That Are Profitable in 2025.
Ingersoll Rand Inc. (NYSE:IR) delivered a strong performance in 2024 with double-digit adjusted EPS growth and a robust free cash flow margin, despite a dynamic global market environment. The company achieved a record adjusted EBITDA margin of 27.9%, up 190 basis points from the prior year, while full-year adjusted EPS finished at $3.29 per share, representing an 11% YoY increase. Total company orders were up 4%, and revenue increased 5% for the full year, with a book-to-bill ratio of 0.98, which demonstrates a deep pipeline of orders for customers.
Looking ahead to 2025, Ingersoll Rand Inc. (NYSE:IR) expects total revenue growth between 3% and 5%, with organic growth of 1% to 3%. The M&A pipeline remains robust, with over 200 companies in the funnel. The company has demonstrated continued success in its acquisition strategy, having acquired approximately $625 million in annualized revenue from 18 acquisitions in 2024 at less than 14x the pre-synergy adjusted EBITDA multiple, which is considered cheap in the current reality. Notably, the company maintains a strong balance sheet with total liquidity of $4.1 billion, including $1.5 billion of cash on hand at quarter end, which positions it well to withstand any economic slowdown and even a prolonged recession.
