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I recently read an interesting article on Personal Dividends about choosing recession stocks. Actually, the article focused on developing investing strategies for recession stocks and on strategies to deal with high inflation (which many believe is on its way). But I thought that I’d focus mostly on recession stocks here. With the stock market slipping back into negative territory, it makes sense to look for stocks that are likely to pull through the recession — all stocks are on sale right now.

Choosing recession stocks for your investment portfolio

Recession stocks are those that generally stay stable during downcycles. These stocks are helped by the fact that the products associated with the companies are considered “needs” rather than “wants” or “luxuries”. Here are some of the sectors that you might consider recession stocks — and good bargain choices for your investment portfolio:

• Health care:  Companies that provide health care services and supplies. Medical companies and some insurance companie. Indeed, this sector is expected to see growth as Baby Boomers age.
• Consumer staples: Even in a recession, people need soap. Companies that manufacture and sell hygiene essentials and other generally accepted necessities can make good investments.
• Government contractors: Personal Dividends points out that defense suppliers and prison management companies often continue to do well in times of recession.
• Vice: Alcohol, tobacco and sex industry stocks tend to remain somewhat steady in times of recession. And they tend to grow even bigger when the recession ends.
• Discount retailers: Deep discounters — like dollar stores — tend to hold their own during a recession. People are looking for ways to save money, and that’s where they do more of their shopping.

Look around and see if you can identify good bargains that are likely to avoid precipitous losses during the recession. These stocks are also likely to see gains when the recession is over. They probably won’t be huge gains, but they will be there, and they will help your investment portfolio.

Disclaimer: I am not an investment professional. Nothing in this piece or on this Web site should be construed as investment advice. Before making investment decisions, do your own research and/or consult with an investment professional. All investment comes with the risk of loss. You are responsible for your own investment decisions and any loss that may result from your decisions.