Which Stocks Rise When The Market Falls?

Which Stocks Rise When The Market Falls? While the stock market has been in a tumultuous state for the past twelve months or so, it’s not the first time both investors and traders have seen just how unpredictable the New York Stock Exchange can be — and, rest assured, it’s far from the last time either.

From several past recessions to various uncertain times in the history of the United States, the stock market has risen and fallen just as consistently as the changing of the seasons. However, as time has shown again and again, there are always certain anomalies that shine through when the market is trending downward.

These stocks, which have proven to be what’s known as recession-proof, are the ones that increase in value while the rest do the opposite. As such, they’re well worth considering when trying to determine which stocks rise when the market falls.

What Are The Best Stocks To Buy During A Recession?

Being recession-proof is a highly sought-after quality for a company’s stock to have, but it’s not always something that can be predicted or anticipated — for instance, who would have thought that medical face masks or cleaning supplies would be such a hot commodity in 2020?

That’s not to say that there aren’t stocks that haven’t shown themselves to be dependable in recessions past, though. From the COVID-19 pandemic to the 2007-2008 financial crisis and beyond, the best stocks to buy during a recession are the ones that have stood the test of time in the past.

Going forward, it seems safe to assume that they would perform similarly well in a future recession — as such, they are well worth investing in and holding onto for years to come.

Essential Goods and Services

First and foremost, stocks that represent essential goods and services are undoubtedly the most trustworthy in a recession.

Water companies such as Invesco Water Resources ETF (PHO) and First Trust ISE Water Index Fund (FIW), utility providers including The AES Corporation (AES) and UGI Corporation (UGI), and even brand names like Procter & Gamble (PG) and Colgate (CL) are not likely to tank, even when the rest of the stock market trends downward.

This is because essential goods and services are always going to be essential, regardless of whether there’s a recession going on or not.

Food, water, shelter, and other personal items like toilet paper or cleaning supplies are all dependable investments, recession or not.

Discount Stores

While it might not be the first thing you think of when considering what recession-proof stocks look like, dollar stores have shown a lot of promise in recessions past.

Dollar Tree (DLTR), Family Dollar (FDO), and even dollar store-adjacent retailers like TJ Maxx (TJX) and Ross (ROST) have shown that when consumers have less money to spend, they go to the stores with lower prices.

Then there’s Costco (COST), which hasn’t stopped rising since the start of the COVID-19 pandemic because of its massive quantities at affordable prices. It sounds obvious in hindsight, but discount store stocks are kind of like a hidden gem during a recession.

Safe Haven Stocks

You’ve probably heard the phrase “too big to fail” before, and that’s the exact kind of thinking at play when investing in safe haven stocks during a recession.

These companies — like Coca-Cola (KO), Berkshire-Hathaway (BRK-A and BRK-B), and Philip Morris International (PM) — have established themselves as relatively risk-free investments during times of economic recession.

This is because they’re enormous companies, for one, but it’s also because they’re reliable. In other words, they aren’t going anywhere, and a recession is not likely to change that presumed fact.

Major Retailers

Initially, it might sound contradictory to say that major retailers can be just as dependable as dollar stores in a recession. However, in the wake of the COVID-19 pandemic, it’s clear that both can be true.

Just take a look at Amazon (AMZN), whose profits increased over 200% since the onset of the novel coronavirus.

It isn’t the only one who has made massive gains over the past year, either: Walmart (WMT) and its low prices have always been attractive, recession or not, but its investment in grocery pickup and delivery during COVID-19 made it one of the premier retailers in 2020 and into 2021.

Same goes for Target (TGT), which barely even faltered when the competition’s stocks tumbled in March of 2020 and has only continued to skyrocket in value since then.

These major retailers are attractive to consumers because of the variety of products they offer and their new focus on convenient pickup and delivery options — a major plus when going outside wasn’t always an option.

Hardware Stores

Oddly enough, hardware stores are another stock option that surprised investors and traders during the most recent recession.

When seemingly everyone decided that quarantining at home made the perfect excuse for widespread renovations, Lowe’s (LOW) and Home Depot (HD) became the place to spend leftover funds from stimulus checks, and even suppliers like Sherwin-Williams (SHW) and CRH plc (CRH) have reaped the benefits of this increased attention being paid to home renovation projects.

This resulted in substantial gains for all sorts of publicly traded hardware stores, and it seems there is not an obvious end in sight for this increase — even as lumber prices continue to rise to astronomical levels.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.