5 Best Recession-Proof Stocks to Buy Now

In this article, we will be looking at the 5 best recession-proof stocks to buy now. To see more of these stocks, you can go take a look at the 10 Best Recession-Proof Stocks to Buy Now.

5. The Coca-Cola Company (NYSE:KO)

Number of Hedge Fund Holders: 61

The Coca-Cola Company (NYSE:KO) was spotted in the 13F holdings of 61 hedge funds in the first quarter, with a total stake value of $27.5 billion.

The Coca-Cola Company (NYSE:KO), a beverage-producing consumer staples stock, is one that investors can benefit from during a recession.

Barclays holds an Overweight rating and a $73 price target on The Coca-Cola Company (NYSE:KO) shares as of April 26.

4. Abbott Laboratories (NYSE:ABT)

Number of Hedge Fund Holders: 70

Abbott Laboratories (NYSE:ABT) is a healthcare equipment company based in North Chicago, Illinois. While many expect healthcare companies to do well during a recession, Abbott Laboratories (NYSE:ABT) proved this was possible by outperforming the S&P 500 by 33.6% during the 2008 financial crisis.

There were 70 hedge funds long Abbott Laboratories (NYSE:ABT) in the first quarter. Their total stake value in the company was $2.4 billion.

Analysts at Raymond James hold an Outperform rating on Abbott Laboratories (NYSE:ABT) shares as of April 20, alongside a raised price target of $123.

Polen Capital made the following comment about Abbott Laboratories (NYSE:ABT) in its first-quarter 2023 investor letter:

“As stated below in the portfolio activity section, Abbott Laboratories (NYSE:ABT) is expected to see roughly $6 billion in COVID test sales evaporate this year, creating a headwind for margins and underlying earnings per share. As long-term owners of the business, these test sales were never part of our original investment case. The core business, our primary focus, has a clear path of growing high single digits in 2023 with durable growth beyond, in our view. We believe the current price of 23x NTM P/E , while reasonable, is also misleading considering earnings this year will be artificially depressed because of the drop in COVID testing sales. On normalized earnings, the price is lower. We anticipate underlying EPS growth of at least low-teens over the next three to five years.

Lastly, we trimmed Abbott Laboratories, bringing it back to a more average position size and to also fund our increase in Thermo Fisher. Abbott is entering a year in which the company is expected to see approximately $6bn in COVID-19 test sales disappear, thus, creating a headwind for margins and EPS. That said, the core business has a clear path to growing high single digits in FY23. EPS grew at a 20% CAGR from 2019-2022, far beyond our expectations when we initiated our investment. Now, we expect a more normal growth rate of low teens EPS beyond this year. Further, management’s adeptness at allocating capital continues to impress us. We expect Abbott to drive top line growth without heavily investing in R&D and SG&A this year— management effectively “front-loaded” those investments in 2021 and 2022 when COVID test sales created a bolus of cash. We believe this should allow for leverage on the operating margin going forward. Combined, Abbott and Thermo Fisher now represent 7% of the Portfolio.”

3. The Procter & Gamble Company (NYSE:PG)

Number of Hedge Fund Holders: 75

Our hedge fund data shows 75 hedge funds long The Procter & Gamble Company (NYSE:PG) in the first quarter, with a total stake value of $4.7 billion.

The Procter & Gamble Company (NYSE:PG) is another consumer staples stock on our list, based in Cincinnati, Ohio.

Lauren Lieberman at Barclays holds an Overweight rating on The Procter & Gamble Company (NYSE:PG) as of April 26, alongside a $167 price target.

2. Walmart Inc. (NYSE:WMT)

Number of Hedge Fund Holders: 91

Walmart Inc. (NYSE:WMT) is a retail and wholesale company based in Bentonville, Arizona. Retail companies in the consumer staples sector have historically been recession-proof.

Walmart Inc. (NYSE:WMT) outperformed the S&P 500 by 56.3% during the 2008 financial crisis.

Seth Sigman, an analyst at Barclays, holds an Overweight rating on Walmart Inc. (NYSE:WMT) shares as of May 21. The analyst also raised his price target on the stock from $159 to $162.

Walmart Inc. (NYSE:WMT) was seen in the portfolios of 91 hedge funds in the first quarter. Their total stake value was $5.7 billion.

1. UnitedHealth Group Incorporated (NYSE:UNH)

Number of Hedge Fund Holders: 116

Lisa Gill at JPMorgan holds an Overweight rating on UnitedHealth Group Incorporated (NYSE:UNH) as of May 30.

UnitedHealth Group Incorporated (NYSE:UNH) is a stellar healthcare company that is also a dividend payer with a yield of 1.35% as of June 7.

There were 116 hedge funds long UnitedHealth Group Incorporated (NYSE:UNH) in the first quarter. Their total stake value was $11.7 billion.

Fred Alger Management, an investment management company, mentioned UnitedHealth Group Incorporated (NYSE:UNH) in its first-quarter 2023 investor letter:

“UnitedHealth Group Incorporated (NYSE:UNH) is an integrated healthcare benefits company uniquely positioned to address rising healthcare costs for its customers, due to its vertical integration, size, and scale. The Optum health benefits services unit, which accounts for approximately 45% of the company’s operating earnings, in our view, has the potential to grow even further as customers look for ways to manage rising healthcare costs. During the period, shares detracted from performance due to several factors: 1) many 2022 healthcare winners with shorter duration profiles and persistent earnings profiles, such as UnitedHealth Group. underperformed in the first quarter of 2023, 2) uncertainty surrounding Medicare Advantage reimbursement levels from the Federal government in 2023, which will be determined later in the year, and 3) increased regulatory scrutiny in the form of potential Medicare Advantage audits across the industry. While these concerns have impacted UnitedHealth in the near-term, we believe company fundamentals remain intact given its large scale business model, competitive advantages, and medium to long- term growth prospects.”

See also 14 Best Stocks To Buy Before A Recession and 13 Best Gold Stocks To Buy For Recession.