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Defensive Stocks to Watch as Recession Fears Rise

Defensive stocks like Walmart and Philip Morris may outperform during a recession. With the U.S. economy possibly weakening, these companies could benefit from increased consumer demand for value and addicted product usage.

Date: 
AI Rating:   7

Recession Trends and Stock Performance
The current report highlights significant concerns about the U.S. economy possibly entering a recession, with the Atlanta Federal Reserve predicting a decline in GDP by 2.1%. Such economic downturns often lead investors to look for defensive stocks that are likely to perform better under adverse conditions.

Walmart (NYSE: WMT)
Walmart is noted for its resilience during past economic downturns, having grown by 2% during the Covid recession while the S&P 500 experienced a 25% loss. Additionally, it rose by 12% during the Great Recession. The company’s ability to attract consumers with everyday low prices positions it well to benefit from increased demand as other retail options become less appealing during economic hardships. There is no specific mention of current EPS, revenue growth, or profit margins in the report.

Philip Morris International (NYSE: PM)
Philip Morris is another stock attached to prospects of stability during a recession. The company's traditional cigarette segment is experiencing modest growth, supported by strong pricing power. This performance is particularly important given Philip Morris’ well-documented addiction product base, which tends to see stable demand regardless of economic conditions. Further, their smokeless products, such as Zyn and IQOS, show impressive growth potential with projected volume growth rates between 34% and 41%. While the report does not specify profit margins or revenue figures, the positive unit economics for these products, being significantly better than traditional cigarettes, highlight the company’s growth prospects.

In summary, the information provided indicates that both Walmart and Philip Morris International are positioned favorably to endure not just the challenges posed by an impending recession but also to capitalize on them. This potential shift might suggest that investors should keep a close watch on these defensive stock options during uncertain economic times.

Stocks:  WMT PM