what stocks go up in a recession

This guide answers what stocks go up in a recession by reviewing historical patterns, sector traits, representative tickers, ETFs, and practical strategies to build defensive exposure — with brand-...

2025-08-23 04:24:00

By Alex Carter

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Stocks That Go Up in a Recession

A common investor question is: what stocks go up in a recession and why? This article defines a recession, reviews how markets typically behave during downturns, and surveys sectors and representative equities that have historically held up or appreciated in past recessions. No company is truly recession‑proof, and past performance does not guarantee future results.

How Recessions Affect Equity Markets

Recessions are periods of falling GDP, rising unemployment, and reduced consumer and business spending. Market responses usually include elevated volatility, falling overall equity prices, and sector rotation as investors shift from cyclical growth names to more defensive assets.

Common macro drivers during recessions:

Falling GDP and business investment, reducing demand for cyclical goods and services.
Rising unemployment and tighter consumer budgets, shifting spending toward essentials and discount channels.
Policy responses such as monetary easing or fiscal stimulus that influence interest rates and liquidity.
Credit strain that magnifies downturns for leveraged firms and sectors.

During these periods, investors often ask what stocks go up in a recession so they can allocate into holdings with more stable cash flows, stronger balance sheets, and defensive demand profiles.

Historical Evidence — What Happened in Past Recessions

Historical downturns show patterns but also important differences by cause and timing. Two instructive episodes are the Global Financial Crisis (2007–2009) and the COVID‑19 shock in 2020.

2008–2009 Global Financial Crisis: The collapse of housing and a credit freeze hit banks and cyclical sectors hardest. Consumer staples, certain healthcare companies, and large discount retailers held up relatively better. For example, some consumer staples and grocery retailers reported steadier revenue and were cited by analysts as defensive names during the episode.
2020 COVID‑19 shock: This recession was unique because a public‑health lockdown dramatically altered consumer behavior. Grocery, consumer staples, and home‑entertainment and communication services saw demand surge in many markets, while travel, leisure, and in‑person retail suffered. Some subscription and low‑cost entertainment platforms experienced growth owing to stay‑at‑home trends.

As of 2024‑06, several industry summaries (Investopedia, NerdWallet, and Nasdaq) reported that defensive sectors such as consumer staples, healthcare, utilities, and select discount retail names historically outperformed or fell less during severe downturns. These patterns emphasize that the answer to what stocks go up in a recession is often sector‑and company‑specific.

Characteristics of Stocks That Tend to Outperform in Recessions

Stocks that tend to fare better in downturns usually share several traits:

Inelastic customer demand: Products and services people need regardless of income changes (food, basic hygiene, essential medications).
Recurring or predictable revenue: Subscription models, contracted services, or regulated rates provide cash‑flow visibility.
Strong balance sheets and low leverage: Lower debt reduces bankruptcy risk when sales slow.
Consistent free cash flow and dividend history: Firms that generate cash and sustain payouts often retain investor interest.
Pricing power and margin resilience: Brands that can maintain prices and margins mitigate demand shocks.
Defensive correlation: Earnings that show lower correlation to GDP declines.

Investors searching for what stocks go up in a recession typically screen for these characteristics rather than relying on sector labels alone.

Sectors Commonly Considered Recession‑Resilient

Consumer Staples

Why they hold up: Food, household products, and personal care are necessities; spending on these categories is relatively stable even when discretionary purchases decline. Large branded manufacturers and grocery chains often maintain volumes and can pass through price changes.

Representative examples frequently cited by analysts: Procter & Gamble (PG), Clorox (CLX), J.M. Smucker (SJM), Kroger, and Walmart (WMT).

Healthcare and Pharmaceuticals

Why they hold up: Healthcare spending is largely non‑discretionary and often supported by insurance or government programs. Drug makers, medical device companies, and managed care firms may see steadier demand.

Examples: Johnson & Johnson (JNJ), UnitedHealth (UNH), Baxter.

Utilities and Regulated Services

Why they hold up: Utilities offer essential services with regulated or predictable returns. Cash flows are comparatively stable and dividend yields often attract investors during downturns.

Examples: NextEra Energy (NEE) and other electric utility companies.

Discount Retailers and Value‑oriented Retail

Why they can gain: Consumers often trade down to lower‑cost retailers during recessions, creating market share opportunities for discount chains.

Examples: Dollar General (DG), Dollar Tree (DLTR), Costco (COST), Walmart (WMT).

Consumer Defensive Packaged Goods & Food

Why they hold up: Branded food and packaged goods are repeat purchases with loyal customers; strong brands can preserve margin and volume.

Examples: Procter & Gamble (PG), J.M. Smucker (SJM), certain packaged food companies.

Select Communication / Entertainment / Subscription Businesses

Why some perform: Low‑cost or essential subscription services (communication, streaming, gaming) can retain subscribers as consumers seek affordable home entertainment. This was particularly visible in the 2020 COVID shock, though it’s not universally true for all discretionary entertainment firms.

Caveat: Outcomes depend on pricing, churn rates, and whether the service is perceived as essential.

Example: Netflix (NFLX) performed well in parts of the 2020 shock, but results vary by recession.

Defense and Aerospace

Why they can hold up: Government defense commitments are often less cyclical because they’re backed by multi‑year budgets, which can provide stability for large contractors.

Example: Lockheed Martin (LMT).

Select Technology & Software (Recurring Revenues)

Why they can be resilient: Software-as-a-Service (SaaS) businesses with subscription models, high gross margins, and mission‑critical products can maintain revenue during downturns. However, tech exposure is company‑specific.

Examples often mentioned: Accenture (ACN) and mission‑critical software providers such as Synopsys (SNPS) in certain contexts.

Precious Metals / Miners and Safe‑haven Assets

Why they matter: Gold and related miners are traditional safe havens in crises, with bullion often used to hedge currency and inflation risks. Miners’ stocks are more volatile and tied to operational and commodity‑price risk.

Real Estate (Selective) and REITs

Why select categories hold up: Residential, grocery‑anchored retail, and industrial/logistics REITs (driven by e‑commerce fulfillment) can be defensive. Office and high‑end retail REITs tend to be cyclical and vulnerable.

Representative Stocks Frequently Cited for Recession Resilience

Below is a short annotated list of tickers that literature and market summaries often cite when investors ask what stocks go up in a recession. This is illustrative, not prescriptive.

WMT (Walmart): Large discount retailer with broad scale and grocery exposure; historically seen as defensive.
COST (Costco): Membership‑based wholesale retailer with loyal customers and value positioning.
PG (Procter & Gamble): Large consumer staples conglomerate with many everyday brands.
CLX (Clorox): Household products maker; often viewed as defensive in demand downturns.
SJM (J.M. Smucker): Branded food company with stable packaged goods demand.
DG (Dollar General): Discount retailer focused on value shoppers and lower‑income communities.
DLTR (Dollar Tree): Deep‑discount chain benefiting from trade‑down behavior.
UNH (UnitedHealth): Diversified health insurer and services provider with recurring revenues.
JNJ (Johnson & Johnson): Large healthcare conglomerate with diversified revenue streams.
NEE (NextEra Energy): Regulated utility and renewable developer with stable cash flows.
LMT (Lockheed Martin): Major defense contractor with large government contracts.
ACN (Accenture): Business services firm with stable contract revenue and diversified client base.
SNPS (Synopsys): Software company providing critical electronic‑design tools (example of niche software resilience).
NFLX (Netflix): Example of a subscription entertainment company that benefited in the 2020 shock — noted as an outlier rather than a universal recession winner.

Caveats: Each company has unique risks — competitive dynamics, leverage, regulatory exposure, and valuation. Company‑specific events (recalls, litigation, or demand shifts) can override sector tendencies.

ETFs and Funds to Access Defensive Exposure

For investors seeking diversified defensive exposure rather than single‑stock risk, ETF vehicles are commonly used. Typical categories include:

Consumer staples ETFs (broad exposure to packaged goods and food companies).
Healthcare ETFs (pharmaceuticals, managed care, and medical devices).
Utilities ETFs (regulated utilities and infrastructure).
Dividend and dividend‑aristocrat ETFs (companies with long histories of paying and raising dividends).
Short‑term government bond funds, TIPS funds, and gold ETFs for complementing equity defenses.

Investors often prefer ETFs for cost efficiency, instant diversification, and ease of trading. When using ETFs, check sector composition, expense ratios, and underlying holdings.

Strategies for Investing Before or During a Recession

Prudent approaches commonly highlighted by financial educators and analysts include:

Diversify across defensive sectors and high‑quality names rather than concentrating in a single stock.
Emphasize balance‑sheet strength, recurring revenue, and dividend sustainability when screening defensive candidates.
Use dollar‑cost averaging to reduce timing risk when building positions in anticipation of or during a downturn.
Consider liquidity and time horizon: maintain an emergency cash buffer and avoid locking capital that may be needed during a prolonged downturn.
Combine equity defenses with traditional hedges: high‑quality bonds, TIPS, and allocation to safe‑haven assets such as gold.
Rebalance thoughtfully: avoid panic selling; consider trimming positions that have become overvalued relative to risk profiles.

Timing the market is difficult; many investors focus on quality and balance rather than attempting precise entry timing. Investors curious about market access for hedging or trading should explore Bitget’s platform options and Bitget Wallet for custody and trading convenience.

Risks, Caveats, and Common Misconceptions

“Recession‑proof” is a misnomer. No stock is immune to poor operational execution, regulatory shocks, or extraordinary market stress.
Recessions differ by cause: a demand‑led consumer downturn can hit different sectors than a financial‑system‑driven crisis or a supply shock.
Interest rates and policy responses matter: rising rates can pressure high‑dividend sectors (like utilities) or high‑growth tech, while easing can support risk assets.
Sector labels alone are insufficient. Company fundamentals (margins, leverage, management) generally determine outcomes more than sector classification.

Investors asking what stocks go up in a recession should therefore combine sector thinking with granular company due diligence.

Case Studies

2008 Financial Crisis

Patterns: Financials and housing‑related sectors underperformed sharply due to credit contraction and leverage. Consumer staples, some utilities, and select discount retailers were relatively resilient as consumers reallocated spending toward essentials and value.

Standout themes: Companies with low leverage, stable cash flows, and essential products held up better. Dividend‑paying consumer staples often experienced less severe share‑price declines versus cyclicals.

2020 COVID‑19 Shock

Patterns: The pandemic produced an abrupt stop to many in‑person activities. Grocery, food‑at‑home, packaged goods, healthcare supplies, and home entertainment/communication saw demand surge in many markets. Travel, leisure, and traditional retail were hit hardest.

Standout themes: Subscription and streaming services, low‑cost retail, and essential goods producers saw improved growth in 2020, demonstrating that recession dynamics tied to unique external shocks can create winners among both defensive and some discretionary businesses.

As of 2024‑06, multiple reviews of the 2020 episode (Nasdaq, Investor’s Business Daily) highlighted how consumer behavior shifts can produce atypical winners in certain recessions, underscoring that context matters when answering what stocks go up in a recession.

How to Evaluate a “Recession‑Resilient” Stock — A Due‑Diligence Checklist

When evaluating candidates, consider the following checklist:

Revenue stability: Does the company have predictable demand or recurring revenue?
Margin resilience: Can the company protect margins under pricing pressure?
Leverage metrics: Debt/EBITDA and interest coverage ratios indicate solvency risk.
Free cash flow: Positive and consistent FCF supports operations and dividends.
Dividend sustainability: Payout ratios and historical consistency matter for income investors.
Market share and brand strength: Durable competitive advantages help preserve sales.
Management track record: Proven capital allocation and crisis management are valuable.
Valuation: Even defensive businesses can be poor investments if purchased at excessive valuations.
Operational risks: Supply chains, regulatory exposure, and litigation can change an otherwise resilient profile.

Apply quantitative screening along with qualitative analysis to develop a balanced assessment of what stocks go up in a recession for your specific goals.

References

For detailed citations, historical sector returns, and stock performance by recession episode, consult the publications listed in Further Reading and company filings. Historical price and return datasets are available through major market data vendors and exchange data feeds. As of 2024‑06, Investopedia and Nasdaq published accessible summaries of sector performance in recent recessions.

Notes for editors: Update the "Representative Stocks" and "Case Studies" sections periodically with post‑recession analyses. When available, include data tables showing returns by sector and select tickers for each recession episode. Check the latest ETF compositions and expense ratios before publication. For readers interested in trading or custody options, recommend Bitget and Bitget Wallet for platform and wallet needs.

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