In this piece, we will take a look at the five best recession-proof stocks to buy in October. For a primer on the macroeconomic environment and more stocks, head on over to 10 Best Recession-Proof Stocks to Buy in October.
5. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 53
Lowe’s Companies, Inc. (NYSE:LOW) is a home improvement retailer that provides a variety of products such as hardware, plumbing, flooring, décor, and lighting. It is headquartered in Mooresville, North Carolina.
Lowe’s Companies, Inc. (NYSE:LOW) is the second largest home improvement retailer in the U.S. It has close to 2,000 stores and brought in $95 billion in revenues in its latest fiscal year. A key fact that will help the company in a recession is that the firm caters to the needs of the do-it-yourself industry, and is relatively insulated against the professional construction industry. This segment is also slated to account for $315 billion of the $545 billion of the North American home improvement market growth from 2021 to 2027.
Lowe’s Companies, Inc. (NYSE:LOW)’s net income has also grown at a CAGR of 22% over the past nine years. The company pays a $1.05 dividend for a 2.17% yield. Insider Monkey’s Q2 2022 survey of 895 hedge funds outlined that 53 had invested in it.
Out of these, Lowe’s Companies, Inc. (NYSE:LOW)’s largest investor is Bill Ackman’s Pershing Square which owns 10 million shares that are worth $1.7 billion.
4. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 67
Walmart Inc. (NYSE:WMT) is an American retailer and wholesaler which operates through supermarkets, discount stores, supercenters, and electronic commerce websites. The firm is headquartered in Bentonville, Arkansas.
Walmart Inc. (NYSE:WMT) managed to grow its revenue by 12% in its latest quarter, indicating already that it can perform well in an inflationary environment. It has also reduced its long term debt by $14 billion in the past three years, and the firm has also grown its EPS significantly since the coronavirus dips.
Walmart Inc. (NYSE:WMT) rounded off strong income statement performance in July 2022, when it also managed to grow its net income by 23% – at a time when inflation was biting into operating margins and keeping costs high for most firms. The company pays a 56 cent dividend for a 1.67% yield. By the end of this year’s second quarter, 67 out of the 895 hedge funds polled by Insider Monkey had invested in the company.
Walmart Inc. (NYSE:WMT)’s largest investor in our database is Rajiv Jain’s GQG Partners which owns 9.8 million shares that are worth $1.1 billion.
3. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 71
The Procter & Gamble Company (NYSE:PG) is one of the oldest consumer packaged goods companies in the world as it was set up in 1837 and is currently headquartered in Cincinnati, Ohio, the United States. Its products include diapers, deodorants, detergents, and toothpaste amongst countless others.
The Procter & Gamble Company (NYSE:PG) has managed to grow its revenue by an average of 4.7% and its net income by an average of 8.3% over the past four years – a key fact about its recession-proof capabilities since the years also saw a recession ushered in by the coronavirus pandemic.
Since it is one of the largest brands of its kind, The Procter & Gamble Company (NYSE:PG) also remains well insulated against inflation as it can simply pass down the higher prices to its customers without significantly affecting sales. The firm pays a 91 cent dividend for a 2.84% yield. Insider Monkey’s June quarter of 2022 survey covering 895 hedge funds portfolios outlined that 71 had invested in the firm.
The Procter & Gamble Company (NYSE:PG)’s largest investor is Ray Dalio’s Bridgewater Associates which owns 670 million shares that are worth $970 million.
2. The Home Depot, Inc. (NYSE:HD)
Number of Hedge Fund Holders: 80
The Home Depot, Inc. (NYSE:HD) is a home improvement retailer that sells a variety of building and other materials such as furnaces, countertops, central air systems, and flooring. The company is headquartered in Atlanta, Georgia, the United States.
The Home Depot, Inc. (NYSE:HD) earns most of its revenue from the home improvement sector, with close to 90% of its revenue coming from this segment. This is a crucial factor since a slowdown in the housing market will result in some of the spending drawdown redirected toward home improvement – by both homeowners and by landlords. The Home Depot, Inc. (NYSE:HD) reported a whopping $44 billion in sales during its second quarter, which marked for a 6.5% growth at a time the housing market was beginning to slow down.
The Home Depot, Inc. (NYSE:HD) also pays a $1.9 dividend for a 2.66% yield. By the end of this year’s second quarter, 80 out of the 895 hedge funds polled by Insider Monkey had bought the company’s shares.
The Home Depot, Inc. (NYSE:HD)’s largest investor is Ken Fisher’s Fisher Asset Management which owns 8.3 million shares that are worth $2.2 billion.
Diamond Hill Capital mentioned the company in its Q2 2022 investor letter. Here is what the fund said:
“The Home Depot, Inc. (NYSE:HD) is a high-quality operator in the home improvement industry. Macroeconomic concerns, particularly the rise in mortgage rates, caused the share price to pull back and trade at a greater discount to our estimate of intrinsic value. We believe Home Depot is well positioned to continue gaining share due to its premium real estate locations, strong operations and recent investments in its supply chain. We like Home Depot’s exposure to the professional customer and believe in its ability to take market share in this segment as we believe home improvement spending has the potential to remain resilient in upcoming years.”
1. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 83
Johnson & Johnson (NYSE:JNJ) is an American healthcare company that is one of the oldest in the industry as it was set up in 1886 and is headquartered in New Brunswick, New Jersey. The firm sells a wide variety of medicines such as those for arthritis, bowel disease, and mood disorders.
Johnson & Johnson (NYSE:JNJ) is a top recession stock simply due to the nature of its products. While spending for luxury goods will drop in an economic downturn, that for others such as medicines and diapers will not. Another testament to its strength is the fact that while during the 2008 financial crisis, the Standard and Poor market index dropped by 54%, Johnson & Johnson (NYSE:JNJ)’s shares fell by only 21% during the same time period.
Johnson & Johnson (NYSE:JNJ) also managed to grow both its net income and EPS during the financial crisis, cementing the fact that its products will continue to be in demand. The company pays a $1.13 dividend for a 2.72% yield. Insider Monkey’s Q2 2022 survey of 895 hedge funds outlined that 83 had held Johnson & Johnson (NYSE:JNJ)’s shares.
Out of these, Rajiv Jain’s GQG Partners is Johnson & Johnson (NYSE:JNJ)’s largest investor. It owns 6.5 million shares that are worth $1.1 billion.
Disclosure: None. You can also take a look at 10 Best Stocks to Buy According to Angela Aldrich’s Bayberry Capital Partners and 10 Best Italian Stocks To Buy Now.
