Stocks to Get You Through a Recession

AFTER GAINS OF MORE THAN 20% FOR THE S&P 500 Index in both 2023 and 2024, investors are adjusting to a changed reality in 2025.

- BY JEFF REEVES

The environment has shifted so much that we need to talk about recession-proof stocks.

Uncertainty about the impact of tariffs, the path of inflation and the trajectory of interest rates as well as a general fear that stocks are now overpriced top the list of reasons to fear a bear market.

More and more conversations about the economy include terms like “contraction,” “stagflation” and “recession.”

Investors, traders and speculators as well as policymakers and consumers face a potential future characterized by layoffs and bankruptcies.

And an entirely normal “fear” instinct has been piqued by the rapid emergence of an unconventional policy environment in Washington, D.C., in the second Trump administration.

Even the Federal Reserve is cautious about what comes next.

If you’re concerned about a recession and overpriced growth stocks, the best recession-proof stocks can provide a margin of safety.

Here’s what to look for:

Avoid cyclical stocks: The economy tends to run in cycles, and some businesses do very well in boom times, but suffer during a recession. These “cyclical stocks” are very sensitive to trends in business or consumer spending.

Think hotels that depend on strong travel spending, automakers that sell high-priced cars or retailers that depend on Americans taking frequent trips to the mall.

Stick to defensive sectors: Defensive sectors may not have as much upside, but tend to be more stable when things get tough.