- There are shares in the energy and healthcare sectors that rose significantly even though the rest of the stock market tumbled on recession fears.
- With energy prices rising globally, companies like Exxon Mobil and EQT will benefit for the foreseeable future.
- While some stocks have been winners this year, we have to warn you that even the pros can’t predict which stocks will do well in the future.
The stock market is down, and the numbers don’t look pretty – the Dow closed 400 points down yesterday. With inflation still rising, the Federal Reserve has been raising interest rates, so investors are dumping stocks to liquidate their assets.
Ten of the S&P 500’s eleven sectors are down this year so far. Looking at any report, you will see how low the market is at the moment. However, not all stocks are equally affected by the slowing economy.
We’ll look at recession stocks to find some surprising winners in this lower market, although we should note that we’re not officially in a recession yet.
Does the bear market affect all stocks?
In general, the stock market is generally affected when there are selling in the market. This is because investors want to monetize their assets to prepare for the worst case scenario.
Even stocks with solid financial statements feel the impact. When there is a lot of general uncertainty and volatility in the market, investors are looking to cash in regardless of how well companies are doing, even when companies meet or exceed expectations.
The National Bureau of Economic Research stated that a recession is classified as “a significant decline in economic activity that spreads through the economy and lasts more than a few months.” This means that every company will feel the impact of the recession in some way.
However, some industries are still making money during the recession. Some fields thrive even when the economy is contracting.
How do you find the winners in this bear market?
How do you find stocks that are still doing well? Many investors are struggling to determine where to put their assets during an economic slowdown.
You should look for companies operating in recession-resistant industries. Try to look for defensive stocks that are known to perform well even when the economy is slowing.
What kind of sectors fall under this umbrella?
- Consumer Goods: People will always need basic essentials, including bread, milk, toiletries, and other goods needed to survive.
- Alcohol: People do not give up their vices during a recession. Less money may be spent on fine dining, but consumers will still buy alcohol.
- Services: Energy companies are doing well during a recession because people still need electricity, gas, and water.
- Health Care: People will still need to see a doctor, buy medicines, and spend money on healthcare-related items.
- Basic Transport: Goods have to be moved even when consumer spending is down because people are still buying the basics. Basic transportation includes everything from trucking, freight, and rail transportation.
This does not mean that every company in these industries will thrive during a market downturn. However, it is worth considering rebalancing your portfolio to increase exposure to more stable assets.
What are the winning stocks in this bear market?
We wanted to highlight some of the biggest winners of 2022 when it comes to stocks that have gone up in value while the rest of the market has fallen.
Please note that these stocks have been winners so far as of the closing date of October 14, 2022. Investing in the stock market is risky, and news that affects the stock price may emerge.
The stock is up just 8.39% to $264.63 for the year, and the company has been a recession winner because it is one of the rare stocks to rise after interest rate hike announcements sent the stock market down in September.
Biogen stock exploded 39.85% on September 28 when positive news emerged about the latest treatment for Alzheimer's disease. This stock has been a gainer recently based on new developments when it comes to Alzheimer's disease. If all goes well, there may be more good news to come.
It's worth noting Biogen's competitors who have also seen an increase in stock prices due to the positive news, including Eisai ($ESALY), Eli Lilly ($LLY), and Roche (RHHBY).
ExxonMobil Corp. (XOM)
This stock rose 56.11% to $99.19 in 2022 due to higher energy prices due to current events. The recent rise in energy stocks occurred last week when it was revealed that OPEC was discussing a significant drop in oil prices to control prices.
Exxon Mobil also recently indicated that third-quarter earnings will be strong as it continues to enjoy its dominant position as the largest oil producer in the United States.
McKesson Corp (MCK)
McKesson's stock is up 42.14% to $352.65 for the year. This rise is partly because the company recently announced an agreement to expand its partnership with CVS to continue distributing the drugs through June 2027.
McKesson is responsible for bringing vaccines, medical supplies, and other products into the hands of medical professionals from the manufacturers. This stock has outperformed the market recently.
Even Warren Buffett was investing in the company as earnings continued to grow.
Coterra Energy (CTRA)
Coterra Energy saw its stock price increase by 45.22% in 2022 to $28.42. This diversified energy company was formed in 2021 as a result of the merger of Cabot Oil and Gas and Seamarks Energy.
The company has seen impressive growth in profits due to extensive reinvestment in the business.
EQT Corp. (EQT)
With improving financial conditions and the hot natural gas market, EQT shares surged 88.50% to $41.13 in 2022. This natural gas producer is looking to post record profits this year as the United States becomes the largest exporter of natural gas.
The company has an extensive inventory of drilling sites that will help it continue to grow revenue. With the sanctions imposed on Russia in relation to natural gas, EQT will likely continue to win.
What stocks usually outperform the market during a recession?
While we're not officially in a recession, here are some stocks that have historically done well during recessions.
- Walmart Corporation (WMT): While supply chain issues and rising inflation have weighed on earnings, Walmart is somewhat resistant to a recession as it focuses on basic consumer goods.
- McDonald's Corporation (MCD): People will always need to eat. During times of economic hardship, people turn to fast food.
- Procter and Gamble (PG): Companies that provide consumer goods do well during a recession because people still have to buy basic necessities.
- Johnson & Johnson (JNJ): This company diversifies among many recession-proofing products in the healthcare field.
These stocks weren't yet winners in 2022, but we wanted to include them because they're in recession-resistant industries.
How do you protect your portfolio from stagnation?
You want to do everything you can to make sure your portfolio is recession-proof. Here are some steps you can take now with inflation still rising:
- Invest for the long term: It is important to keep your investments small and keep in mind that investing is a long game.
- Look for defensive stocks: You may want to change the allocations within your portfolio to invest in defensive stocks to protect yourself.
- Know yourself and take risks: If you panic when the market slips, you should evaluate your strategy. You may want to build a more balanced portfolio.
Remember that a recession won't last forever. The economy has always rebounded historically no matter how the dark times turned out.
How should you invest?
Although it is still possible to find winners in the stock market, it is a difficult task at best, and there are many risks involved in investing at the moment.
There are ways to make your portfolio more defensive and less prone to risk. Take a look at Q.ai's inflation suite, and protect your investments from depreciation so you don't have to worry about checking the market report daily.
The good news is that even though the stock market is down, that doesn't mean every company is suffering. The bad news is that we can't guarantee the stocks we've listed or the industries we've mentioned will continue to increase in value.
Nobody can predict the future of the stock market. At the end of the day we are all just trying to predict what will happen next based on the information we have. This is why Q.ai uses Artificial Intelligence to research the markets for the best investments for all types of risk tolerance and economic situations. Even better, you can activate wallet protection at any time to protect your gains and reduce your losses.
Download Q.ai today To access investment strategies backed by artificial intelligence. When you deposit $100, we will add an additional $100 to your account.