Even though a recession can have a bleak outlook, it is often an opportunity to invest in the stock of strong companies that are only experiencing a dip. If you are reading this, you are probably looking for the best investments to make despite the dearth of promises and I assure you this is a good place to start your research.
This brief article will guide you to possible 3 recession-proof industries to invest in. An investment is an asset acquired to generate income or appreciation, which is an increase in the value of that item. However, a substantial increase in value is only accrued over a long period because the value of stocks is derived from compounded interest.
The best-performing assets in a recession are those that don’t have a lot of debt compared to their assets, in other words, they are highly leveraged and do not run the risk of going bankrupt.
The businesses that did the best during the COVID-19 pandemic were those that entered the current climate with strong balance sheets. While understanding that there is no such thing as a zero-risk investment, these are a few recession-proof industries you could invest in:
- Healthcare companies: there’s an increasing opportunity to invest in companies that are always innovating to improve quality of life and raise productivity. It is hard to put a value on vaccines, cancer drugs, joint replacements, and pacemakers. Healthcare has potential benefits for investors from increasing growth opportunities to favourable demographics, this sector offers long-term potential and is expected to receive considerable investments over the next decade.
- Communication services: the telecommunication industry is made up of companies that make global communication possible, whether it is through the phone or the Internet, airwaves, or cables. These companies make it possible to transmit data in words, voice, audio, or video. The largest companies in the sector are telephone operators, satellite companies, cable companies, and Internet service providers. Although individual stocks can be quite volatile, the telecom sector overall has exhibited stable long-term growth, as telecommunications has become an increasingly important basic industry, impervious to business cycles.
- Consumer staples: Consumer staples companies have shown excellent ability to withstand recessions, have consistently strong organic sales, post consistent, incremental growth, and have attractive dividend yields. All these characteristics make them timeless choices for investors looking for reliable investment opportunities.
These are a few of the industries that can withstand a recession and there are many companies under these industries that have shown consistent growth on the Nigerian Stock Exchange. Our market insight resources to research these companies and start investing conveniently on your mobile with i-invest app for long-term gains that can withstand recessionary environments.
At Parthian Securities, we encourage everyone to take ownership of their financial life by asking questions and getting information that matters.
Our research and insights bring you information that fosters smart decision-making because we believe that the best outcomes in life come from being fully informed.
Be Money Smart
Subscribe to Parthian Securities’ newsletters for market updates and tips to help you ace your investment goals.
