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Recession Proof Industries That Can Protect Your Money

The current economic environment is as unpredictable as it has ever been. Let’s examine a few recession proof industries.
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The current economic environment is as unpredictable as it has ever been. Inflation is at its highest rate in decades. There is a war in Europe that shows no sign of getting resolved anytime soon. And, there is still no telling when the lingering effects of COVID-19 will wear off. In times like these, many investors switch their mentality. Instead of trying to generate the highest yearly return possible, they focus on simply losing as little money as possible. If the overall market returns -20% but your portfolio breaks even then you’re technically coming out ahead. With that in mind, let’s examine a few recession proof industries that will protect your money.

Recession-Proof Industries

Real Estate

Real estate is traditionally one of the most recession proof industries out there. I say this for two reasons:

  1. Housing is a necessity: Housing has a fairly inelastic demand. No matter how expensive homes/rent gets, people need a place to live. If you invest in residential real estate then there is a good chance you can stay afloat through any recession. Of course, it ultimately depends on what property you own, the market it’s in, and the way you structure your financing.
  2. Inflation-protected: Real estate is also insulated from inflation. When inflation rises and profits start to erode, landlords can just increase the price of rent. Each year, they can increase the rent to keep pace with inflation. This is why owning real estate is so valuable.

There are dozens of ways that you can invest in real estate. To start, you can take out a loan and buy a property yourself. Or, you can use a third-party site like Fundrise. Fundrise is a site that owns a portfolio of real estate. It then allows you to invest in the properties that it owns.

Finally, you can invest in shares of a real estate investment trust (REIT). A REIT is a company that owns income-producing real estate. Each month, it pays out 90% of its income to investors.

There’s also one more stock you can buy to get exposure to recession proof industries. Let’s take a look at my favorite recession proof stock: Airbnb.

What makes Airbnb Unique?

Airbnb is in an incredibly unique position. Around the world, Airbnb owners are probably increasing the rates of their Airbnbs to compensate for rising inflation. In fact, we’re already seeing evidence of this. In a letter to shareholders, Airbnb said that Q1 2022 rates were up 39% when compared to 2019 levels. There is a good chance that this trend will continue, especially as we head into the summer months.

Remember that Airbnb mainly generates revenue by collecting a percentage of each stay. Hosts usually pay a flat fee of around 3% to list their property on Airbnb.

Over the coming months, hosts should continue to raise their rates to combat inflation. This will instantly translate to increased revenue for Airbnb. The best part is that Airbnb doesn’t even need to do any additional work to earn this income. Not only is Airbnb inflation-proof, but it might actually perform better.

Consumer Staples

Another one of the safest recession proof industries is consumer staples. Consumer staples are any product that consumers are unable to cut out of their budget. This could be anything from food to toilet paper.

Even in the middle of a recession, people still need to spend money on food, water, and hygiene products. For this reason, consumer staple companies can expect fairly consistent revenue in the coming months. Compare this to a company that sells luxury goods. If the U.S. enters a recession, people are much less likely to splurge on a $1,000 watch or handbag.

There are plenty of ways that you can invest in consumer staple companies. But, the easiest is to buy stock in the world’s largest CPG company: Proctor & Gamble.

Proctor & Gamble

There’s a chance you might not have heard of Proctor & Gamble as it’s not a consumer-facing brand. But, you’ve most definitely heard of the brands that P&G owns. To name just a few, Proctor & Gamble owns:

  • Gillette
  • Pampers
  • Downy
  • Tide
  • Bounty
  • Head and Shoulders
  • Old Spice
  • Febreze

For many Americans, these types of brands are still a necessary expense. With this in mind, P&G should continue to see consistent profits even if we enter a recession.

In 2021, P&G delivered annual revenue of $76.12 billion. It also reported a net income of $14.31 billion. On top of that, it has a dividend yield of 2.58%. P&G stock probably isn’t going to 2X over the next year. But, it’s got consistent, reliable profits and pays a dividend. This makes it a relatively safe place to park your money during a recession.

The only downside to P&G stock is that it owns a lot of premium brands. For example, Gillette razors tend to be much more expensive than other brands. The same is true for Bounty and Tide. There’s a chance that consumers might stray away from P&G products in favor of cheaper ones. If this happens then there’s a chance that they are probably visiting a discount retailer to do so.

Let’s take a look at one one of the final recession proof industries to invest in.

Discount Retail

With inflation sitting at nearly 8%, the American consumer is getting squeezed. With less spending money, consumers are more likely to shop at a discount retailer. For example, instead of stocking up on goods at pricey Whole Foods they might swing by a Walmart. Walmart is the premier example of a discount retailer. However, there’s one other retailer that might be better positioned.

Dollar General

Dollar General operates 18,216 discount stores in the United States. In 2021, it reported annual revenue of $34.22 billion and a net income of $2.4 billion. It also pays a dividend yield of 1.17%. If we enter a recession, consumers will likely clamp down on their spending. They’ll cut out everything but the essentials from their budget. During this time, most retailers will probably experience depressed sales.

On the other hand, Dollar General might actually get a small sales boost. It could experience an influx of shoppers who are suddenly budget-conscious. Basically, lots of people might start shopping at Dollar General that do not normally shop there.

I hope you’ve found this article valuable in learning about three recession-proof industries that are safe to invest in! Please remember that I’m not a financial advisor and am just offering my own research and commentary. As usual, please base all investment decisions on your own due diligence.

The post Recession Proof Industries That Can Protect Your Money appeared first on Investment U.

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Economics

Expert on Bath & Body Works: ‘an easy double the next three years’

Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says…

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Bath & Body Works Inc (NYSE: BBWI) might have been painful for the shareholders this year, but the road ahead will likely be a rewarding one, says the Senior Vice President and Portfolio Manager at Westwood Group.

BBWI separated from Victoria’s Secret

The retail chain separated from Victoria’s Secret in 2021, which, as per Lauren Hill, clears the way for a 100% increase in the stock price in the coming years. On CNBC’s “Closing Bell: Overtime”, she said:

[Bath & Body Works] has really strong pricing power. They have 85% of their supply chain in the United States and with the Victoria’s Secret brand now gone, I think it’s a wonderful buy; an easy double the next three years.

Last month, the Columbus-headquartered company reported results for its fiscal first quarter that topped Wall Street expectations.

Bath & Body Works is a reopening play

The stock currently trades at a PE multiple of 6.64. Hill is convinced Bath & Body works is a reopening name and will perform so much better as the world continues to pull out of the pandemic. She noted:

Customers have missed buying their scented products in store and as their social occasion calendars fill up, they are getting back out there and buying more gifts, including Bath & Body Works products.

Hill also dubbed BBWI a great pick amidst the ongoing inflationary pressures because of its reasonably priced products. Shares are down more than 50% versus the start of 2022.

The post Expert on Bath & Body Works: ‘an easy double the next three years’ appeared first on Invezz.

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Economics

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A…

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Majority Of C-Suite Execs Thinking Of Quitting, 40% Overwhelmed At Work: Deloitte Survey

Authored by Naveen Anthrapully via The Epoch Times,

A majority of C-suite executives are considering leaving their jobs, according to a Deloitte survey of 2,100 employees and C-level executives from the United States, Canada, the UK, and Australia.

Almost 70 percent of executives admitted that they are seriously thinking of quitting their jobs for a better opportunity that supports their well-being, according to the survey report published on June 22. Over three-quarters of executives said that the COVID-19 pandemic had negatively affected their well-being.

Roughly one in three employees and C-suite executives admitted to constantly struggling with poor mental health and fatigue. While 41 percent of executives “always” or “often” felt stressed, 40 percent were overwhelmed, 36 percent were exhausted, 30 percent felt lonely, and 26 percent were depressed.

“Most employees (83 percent) and executives (74 percent) say they’re facing obstacles when it comes to achieving their well-being goals—and these are largely tied to their job,” the report says. “In fact, the top two hurdles that people cited were a heavy workload or stressful job (30 percent), and not having enough time because of long work hours (27 percent).”

While 70 percent of C-suite execs admitted to considering quitting, this number was at only 57 percent among other employees. The report speculated that a reason for such a wide gap might be the fact that top-level executives are often in a “stronger financial position,” due to which they can afford to seek new career opportunities.

Interestingly, while only 56 percent of employees think their company executives care about their well-being, a much higher 91 percent of C-suite administrators were of the opinion that their employees believe their leaders took care of them. The report called this a “notable gap.”

Resignation Rates

The Deloitte report comes amid a debate about resignation rates in the U.S. workforce. Over 4.4 million Americans quit their jobs in April, with job openings hitting 11.9 million, according to the U.S. Department of Labor. In the period from January 2021 to February 2022, almost 57 million Americans left their jobs.

Though some are terming it the “Great Resignation,” giving it a negative connotation, the implication is not entirely true since most of those who quit jobs did so for other opportunities. In the same 14 months, almost 89 million people were hired. There are almost two jobs open for every unemployed person in the United States, according to MarketWatch.

In an Economic Letter from the Federal Reserve Bank of San Francisco published in April, economics professor Bart Hobijn points out that high waves of resignations were common during rapid economic recoveries in the postwar period prior to 2000.

“The quits waves in manufacturing in 1948, 1951, 1953, 1966, 1969, and 1973 are of the same order of magnitude as the current wave,” he wrote. “All of these waves coincide with periods when payroll employment grew very fast, both in the manufacturing sector and the total nonfarm sector.”

Tyler Durden Sat, 06/25/2022 - 20:30

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Spread & Containment

Optimism Slowly Returns To The Tourism Sector

Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn’t much of an improvement, as travel…

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Optimism Slowly Returns To The Tourism Sector

Coming off the worst year in tourism history, 2021 wasn't much of an improvement, as travel remained subdued in the face of the persistent threat posed by Covid-19.

According to the United Nations World Tourism Organization (UNWTO), export revenues from tourism (including passenger transport receipts) remained more than $1 trillion below pre-pandemic levels in 2021, marking the second trillion-dollar loss for the tourism industry in as many years.

As Statista's Felix Richter details below, while the brief rebound in the summer months of 2020 had fueled hopes of a quick recovery for the tourism sector, those hopes were dashed with each subsequent wave of the pandemic.

And despite a record-breaking global vaccine rollout, travel experts struggled to stay optimistic in 2021, as governments kept many restrictions in place in their effort to curb the spread of new, potentially more dangerous variants of the coronavirus.

Halfway through 2022, optimism has returned to the industry, however, as travel demand is ticking up in many regions.

You will find more infographics at Statista

According to UNWTO's latest Tourism Barometer, industry experts are now considerably more confident than they were at the beginning of the year, with 48 percent of expert panel participants expecting a full recovery of the tourism sector in 2023, up from just 32 percent in January. 44 percent of surveyed industry insiders still think it'll take until 2024 or longer for tourism to return to pre-pandemic levels, another notable improvement from 64 percent in January.

Tyler Durden Sat, 06/25/2022 - 21:00

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