In this article, we discuss 5 safe stocks to buy during recessions. If you want to read our detailed analysis of the current economic situation, go directly to the 10 Safe Stocks to Buy During Recessions.
5. Walmart Inc. (NYSE:WMT)
Number of Hedge Fund Holders: 60
Walmart Inc. (NYSE:WMT) is a Bentonville, Arkansas-based operator of discount department stores, hypermarkets, and grocery stores. The company operates on the motto “Everyday Low Prices.”
Walmart Inc. (NYSE:WMT) is a member of the prestigious Dividend Aristocrat list as the company has been increasing its dividends for the past 49 years, and next year will become a ‘Dividend King.’ During the 2008 recession, the share price of Walmart Inc. (NYSE:WMT) increased by 20% and was the sixth-best performer in the S&P 500 Index for that year.
On May 24, Walmart Inc. (NYSE:WMT) revealed that it would be expanding its drone delivery to six states across the United States. The company’s SVP of innovation and automation shared that the company aims to extend the DroneUp delivery system to 34 sites by the end of 2022. This would allow Walmart Inc. (NYSE:WMT) to deliver over 1 million parcels annually by drone.
Investing in Walmart Inc. (NYSE:WMT) has also become attractive due to the inflationary pressures weighing upon the economy. The price hikes are forcing consumers to switch to more economical solutions for their everyday requirements. Thus, big-box retailers like Walmart Inc. (NYSE:WMT) are likely to do well in recessions.
4. Abbott Laboratories (NYSE:ABT)
Number of Hedge Fund Holders: 68
Abbott Laboratories (NYSE:ABT) is a Chicago, Illinois-based healthcare company that manufactures and sells branded generic medicines, diagnostic tools, medical devices, and nutritional products.
In Q1 2022, Abbott Laboratories (NYSE:ABT) saw its revenue increase by 17.5% to $11.89 billion. In a note issued to investors on May 23, equity strategist Mike Wilson at Morgan Stanley picked Abbott Laboratories (NYSE:ABT) as one of the 15 stocks that can weather a bear market. Following the emergence of monkeypox cases around the world, Abbott Laboratories (NYSE:ABT) is working on developing a test for monkeypox.
As of Q1 2022, Fisher Asset Management was the leading investor in Abbott Laboratories (NYSE:ABT). The number of hedge funds invested in Abbott Laboratories (NYSE:ABT) increased by four to 68 on a sequential basis.
Richie Capital Group shared its insights on Abbott Laboratories (NYSE:ABT) in its Q4 2021 investor letter. Here’s what it said:
“Abbott Labs (ABT – up 20.08%) – Abbot Labs continues to benefit from resurging demand for Covid testing kits. The company is planning to increase their monthly production of BinaxNOW athome rapid tests to 100M a month, a 43% increase from current levels.”
3. McDonald’s Corporation (NYSE:MCD)
Number of Hedge Fund Holders: 58
McDonald’s Corporation (NYSE:MCD) is a Chicago, Illinois-based fast-food company founded in 1940 by Richard and Maurice McDonald in San Bernardino, California.
On May 16, McDonald’s Corporation (NYSE:MCD) announced that it would exit the Russian market after serving it for three decades because of the Russia-Ukraine conflict. In a challenging macroeconomic environment, McDonald’s Corporation (NYSE:MCD) can outperform its competitors as it has a strong distribution network that helps in controlling costs during inflationary periods and delivering products through improved digital and delivery capabilities. The contribution of digital sales from the top six markets served by McDonald’s Corporation (NYSE:MCD) increased to 30% in Q1 2022 as opposed to 20% in 2020
Furthermore, the company’s ability to modify its offerings according to the local market’s needs is another plus point for the fast-food chain operator. McDonald’s Corporation (NYSE:MCD) has increased the number of restaurants making deliveries from 65% in Q1 2019 to 80% in Q1 2022. The company also reported a 12% increase in global comparable sales in Q1 2022.
At the end of Q1 2022, 58 hedge funds held a stake in McDonald’s Corporation (NYSE:MCD).
2. C.H. Robinson Worldwide, Inc. (NYSE:CHRW)
Number of Hedge Fund Holders: 23
C.H. Robinson Worldwide, Inc. (NYSE:CHRW) is an Eden Prairie, Minnesota-based third-party logistics provider (3PL), serving different industries across the globe.
The company is exploring autonomous driving to counter the problem of driver shortages and hauling capacity restraints. C.H. Robinson Worldwide, Inc. (NYSE:CHRW) has formed a long-term strategic partnership with Alphabet Inc’s (NASDAQ:GOOGL) Waymo. Under this partnership, Waymo’s autonomous driving platform will be integrated with C.H. Robinson Worldwide, Inc.’s (NYSE:CHRW) Navisphere technology. If the partnership is executed successfully, it will provide a significant boost to the company’s margins.
The analysts are also bullish on C.H. Robinson Worldwide, Inc. (NYSE:CHRW) as Jason Seidl at Cowen increased the target price on the stock from $109 to $123 and reiterated an Outperform rating. The analyst highlighted that C.H. Robinson Worldwide, Inc. (NYSE:CHRW) had found itself in a sweet spot in the brokerage space.
Overall, 23 hedge funds held a stake in C.H. Robinson Worldwide, Inc. (NYSE:CHRW) at the end of Q1 2022.
1. AutoZone, Inc. (NYSE:AZO)
Number of Hedge Fund Holders: 38
AutoZone, Inc. (NYSE:AZO) is a Memphis, Tennessee-based aftermarket automotive parts retailer with more than 6,100 locations across the US, Mexico, Puerto Rico, and Brazil.
In the past decade, AutoZone, Inc. (NYSE:AZO) has been on an aggressive share buyback plan. It has reduced its total outstanding shares from 42 million to 28 million shares and still has an authorized share buyback plan of $2 billion in place. The gross profit margin of AutoZone, Inc. (NYSE:AZO) stands at 52%. The high margins provide a cushion during the inflationary period.
The company is on its way to reporting the third-highest inflationary year as the prices of motor vehicle parts rose by 9.38%. AutoZone, Inc. (NYSE:AZO) also has the option to source these auto parts from low-cost producing countries like Taiwan and Vietnam. Thus, a lower buying price and a higher selling price could further improve the company’s margins.
Although the automobile supply chain has come under pressure due to the chip shortage AutoZone, Inc. (NYSE:AZO) has not been significantly impacted by this development as it sells basic parts like brakes, mufflers, and spark plugs.
Overall, 38 hedge funds held a stake in AutoZone, Inc. (NYSE:AZO) at the end of Q1 2022.
You can also take a peek at the 10 Biotech Stocks to Buy Today According to Ken Fisher’s Fisher Asset Management and 10 Favorite Stocks of Dan Loeb’s Third Point.
