Recession-Busting Stocks Earnings Round-Up: Here Are the Companies Defying a Downturn
Key takeaways
- Recession-resistant stocks usually include essential goods and services, energy and utilities
- Walmart, TJX and Target all beat revenue predictions from Wall Street in Q1
- However all three retailers warned of softer conditions for Q2 thanks to consumers tightening their belts
It was another busy week of earnings results, this time focusing on the retailers we rely on to be pretty much safe in an otherwise turbulent economy. They didn’t disappoint, posting solid earnings and beating investor expectations, but they think the dismal economic outlook could hurt their profits in the next few months. Let’s get into the details.
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What counts as a recession-busting company?
Recession-proof stocks are the ‘unsexy’ part of the market that doesn’t really do much, and that’s very much a good thing when the economic headwinds are blowing. Their value steadily increases, so there aren’t massive gains to be made, but neither are there usually massive losses.
The industries that keep countries going like food, energy and utilities fall under this umbrella. Companies that fall into these categories typically include shopping outlets like Walmart, TJX Group and Target, who released earning reports earlier this week.
The latest earnings from recession-proof stocks
Walmart beat Wall Street’s earnings and revenue expectations for Q1, hitting $1.47 a share on revenue of $152.3 billion compared to the predicted $1.32 a share on revenue of $148.9 billion. U.S. sales climbed 7.4%. It said while food sales had remained steady, discretionary spending had dropped off a cliff in comparison. The stock lifted slightly after the results, but it was short-lived.
Before this Target released its earnings, which were also above expectations but the retailer warned of a slowdown in consumer spending for Q2. It posted earnings of $2.05 a share on revenue of $25.32 billion, but said it anticipated a decline in sales for the next quarter based on Q1’s data. Target stock is down 3% this week.
Discount brand TJX also told a similar tale, warning of lackluster consumer demand over the next few months even though its same-store sales were up 3% for Q1 and earnings per share beat analyst predictions. The share price briefly jumped but has largely remained level this year.
The bottom line
These three retailers may be down slightly thanks to their Q2 warnings, but the beauty of ‘recession-proof’ companies that sell essential goods is that the stock swings are never too wild. Not to mention all three posted better earnings than anticipated, which we could see again as a surprise result for Q2.
Either way, having some of these recession-resistant companies in your portfolio can help you weather the economic downturn — or better yet, you could have AI do the heavy lifting for you.
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