FedEx Corporation (FDX), Macy’s, Inc. (M): Best Stocks for a Possible Recession

An inevitable showdown in Congress about raising the national debt ceiling at the end of next month will once again trigger fears of a possible government shutdown — and talk of going into another recession. Investors have endured this speculation before, and the market almost seems to thrive during these times. Still, nobody could be blamed for wanting to play it safe.

Fortunately, there’s plenty of businesses that are continuing to thrive even as the American economy has been sputtering along in its recovery. Even if the impending doomsday scenario never comes to be on September 30, here are three stocks that you can feel good about in the long-term.

Shipping

FedEx Corporation (NYSE:FDX) said in June that it expected full-year earnings to increase as much as 13% as the company continues to cut $1.7 million in costs. Roughly 3,600 workers will accept a voluntary buyout program, and shares closed at $110.00 on August 1. The day’s high of $110.33 bested a 52-week high of $109.66 despite concerns about revenue as more international shippers are moving to competing two-day or three-day delivery services.

It has not been overnight jets that have helped FedEx Corporation (NYSE:FDX) exceed analyst estimates. Instead, Reuters reported that the company’s operating income from ground shipments increased 13% to $557 million. For its 2013 fiscal year, FedEx reported a 3.7% increase in revenue.

The company has said that in fiscal 2014, it projects “moderate” earnings per share growth of 7% to 13% from fiscal 2013’s adjusted results. The company also projects the world economy will grow 2.7% during that time, an estimate that is even lower than the World Bank’s forecast for 3% global growth. While the cost benefits would not kick in until 2015, positive signs still abound for the company as it boasts a 9.74% return on equity, free cash flow growth is encouraging and FedEx Corporation (NYSE:FDX) — founded at the beginning of a severe two-year recession in 1973 — has weathered difficult times before.

Retail

The thought of a recession would ordinarily make most investors write off a higher end retailer like Macy’s, Inc. (NYSE:M), but the company’s stock price has increased each of the past five years despite lackluster U.S. economic figures. Over the past three months, Macy’s strong trading activity has made its stock performance look impressive in comparison to department store rivals Wal-Mart and Costco.

Macy’s, Inc. (NYSE:M) closing price of $49.27 on August 1 continues a more than 40% increase over the past year. Similarly, the company’s internet sales have also grown by about 40% each of the last two years after Macy’s 2009 restructuring eliminated personnel and changed operational structure. The company’s estimated 14.2% growth in 2013 and its 2.1% dividend yield certainly places it ahead of retail competitors. Currently, Macy’s is strategically increasing the number of stores that can service web orders from fewer than 300 to over 500.

If you want any sign of how Macy’s, Inc. (NYSE:M) is faring against its competition, look to the company’s attempt to block Martha Stewart Living Omnimedia from selling bedding, cookware and other home goods at rival J.C. Penney. Macy’s stock is up 26% year-to-date while shares of Penney are down 30% in the same period.

Pawn Shops

What might seem like dark days for a company can actually be the best time to invest. The pawn shop operator EZCORP Inc (NASDAQ:EZPW) closed more than 100 stores during the quarter ended June 30, costing the company over $21 million. Plunging gold prices caused gold scrapping revenue to cost EZCorp $10 million in net income and $0.18 per share. This resulted in a total net loss of $6 million for the quarter, or $0.11 per share.

However, total revenue was up 13% excluding gold scrapping revenues. EZCORP Inc (NASDAQ:EZPW)’s earning assets — such as pawn loans, consumer loans and inventory on the balance sheet — increased 21% to $416 million. The company has also continued expansion in Canada, Latin America and the United Kingdom.

While EZCorp closing price of $18.52 on August 1 was 17.76% lower than a year before,and headlines focused on the company’s third quarter loss, InvestorPlace Contributor Lawrence Meyers still calls EZCorp his “favorite value stock in the entire world” and wrote that he believes “it’s trading at 50% of what it’s worth.” If the U.S. economy indeed enters a turbulent period after September, it could be EZCORP Inc (NASDAQ:EZPW) — and its shareholders — that very likely stand to benefit.

Conclusion

Stocks were down after the Labor Department released a disappointing jobs report on August 2. The 162,000 jobs added in July fell short of expectations and further demonstrated signs of sluggish economic growth, but these three stocks should give any investor sufficient reason for optimism.

Mandy Seay has no position in any stocks mentioned. The Motley Fool recommends FedEx.

The article The Three Best Stocks for a Possible Recession originally appeared on Fool.com.

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