Finding Winners In A Down Stock Market

Key Takeaways

• There are stocks in the energy and healthcare sectors that have skyrocketed even though the rest of the stock market has tumbled due to recession fears.
• With the price of energy going up globally, companies like Exxon Mobil and EQT stand to benefit for the foreseeable future.
• While some stocks have been winners this year, we must warn you that even the pros can’t predict which stocks will do well in the future.

The stock market is down, and the numbers don’t look pretty – the Dow closed down 400 points yesterday. With inflation still soaring, the Fed has been raising interest rates, so investors are dumping stocks to liquidate their assets.

Ten of the eleven sectors of the S&P 500 index are down year to date. Looking through any report, you’ll see how much the market is down right now. That said, not all stocks are impacted equally by the economy slowing down.

We’re going to look at recession stocks to find some surprising winners in this down market, though we should note that we are not officially in a recession just yet.

Does a down market impact all stocks?

Generally speaking, the overall stock market is impacted when there’s a market sell-off. This is because investors want to liquidate their assets into cash to prepare for the worst-case scenario.

Even stocks with strong financials feel an impact. When there’s so much overall uncertainty and volatility in the market, investors look to cash out regardless of how well companies perform, even when companies meet or exceed expectations.

The National Bureau of Economic Research stated that a recession is classified as “a significant decline in economic activity that is spread across the economy and that lasts more than a few months.” This means that every company will feel the impact of a recession in some way.

However, certain industries still make money during a recession. Some fields even thrive when the economy shrinks.

How can you find winners in this down market?

How do you find stocks that are still performing well? Many investors struggle to decide where to put their assets during an economic slowdown.

You have to look for companies that are in recession-proof industries. Try to look for defensive stocks known for performing well even when the economy slows down.

What kind of sectors fall under this umbrella?

• Consumer staples: People will always need basic staple items, including bread, milk, toiletries, and other goods that are required for survival.
• Alcohol: People don’t give up their vices during a recession. Less money may be spent on fine dining, but consumers will still purchase alcohol.
• Utilities: Energy companies do well during a recession because people still need electricity, gas, and water.
• Health care: People will still need to visit the doctor, purchase medication, and spend money on items related to health care.
• Basic transportation: Goods need to be transported even when consumer spending is down because folks are still purchasing basics. Basic transportation involves everything from trucking, shipping, and rail transportation.

This doesn’t mean that every company in these industries will thrive during a down market. However, it’s worth considering re-balancing your portfolio to increase exposure to more stable assets.

What Stocks Are Winners In This Down Market?

We wanted to highlight some of the biggest winners for 2022 when it comes to stocks that went up in value while the rest of the market tumbled.

Please note that these stocks have been winners thus far as of closing on October 14, 2022. Investing in the stock market is risky, and news could come out that impacts the stock price.

Biogen (BIIB)

This stock is only up 8.39% to $264.63 for the year, the company is a recession winner because it is one of the rare stocks that went up after the rate hike announcements caused the stock market to slide in September.

Biogen’s stock exploded by 39.85% on September 28 when positive news came out about its newest Alzheimer’s treatment. This stock has been a winner lately based on new developments when it comes to Alzheimer’s. If all goes well, there could be more good news coming.

Notable mentions are the competitors of Biogen that also saw an increase in stock price due to the positive news, including Eisai ($ESALY), Eli Lilly ($LLY), and Roche (RHHBY).

Exxon Mobil Corp (XOM)

This stock is up 56.11% to $99.19 in 2022 due to the rising energy prices caused by current events. The most recent rally for energy stocks happened last week when it came out that OPEC was discussing a substantial oil decrease to control prices.

Exxon Mobil also recently signaled that earnings for the third quarter would be strong as it continues to enjoy its dominant position as the largest producer of oil in the U.S.

​​McKesson Corp (MCK)

McKesson stock is up 42.14% to $352.65 for the year. This rally is partially because the company recently announced an agreement to extend its partnership with CVS to continue distributing pharmaceuticals through June of 2027.

McKesson is responsible for getting vaccines, medical supplies, and other products into the hands of medical professionals from manufacturers. This stock has been outperforming the market lately.

Even Warren Buffett has been investing in the company as the dividend continues to grow.

Coterra Energy (CTRA)

Coterra Energy has seen its stock price increase 45.22% in 2022 to $28.42. This diversified energy company was formed in 2021 due to the merger of Cabot Oil & Gas and Cimarex Energy.

The company has seen impressive earnings growth due to heavy reinvestment into the business.

EQT Corp. (EQT)

With improved financials and a hot natural gas market, EQT shares have gone up 88.50% to $41.13 in 2022. This natural gas producer is looking to make record profits this year as the U.S. becomes the largest exporter of natural gas.

The company has a wide inventory of drilling locations that will help them continue to increase revenue. With the sanctions that have been imposed on Russia when it comes to natural gas, EQT will likely continue to be a winner.

What stocks typically outperform the market during a recession?

Even though we’re not officially in a recession, here are a few stocks that have historically done well during economic downturns.

• Walmart Inc. (WMT): While supply chain issues and rising inflation have impacted profits, Walmart is fairly recession-proof because they focus on consumer staples.
• McDonald’s Corp. (MCD): People will always need to eat. During times of economic difficulties, folks do turn to fast food.
• Procter & Gamble Co. (PG): Companies that offer consumer staples do well during a recession because people still have to purchase basic necessities.
• Johnson & Johnson (JNJ): This company is diversified between many recession-proof products in the healthcare field.

These stocks haven’t been winners yet in 2022, but we wanted to list them because they’re in recession-proof industries.

How do you recession-proof your portfolio?

You want to do whatever you can to ensure that your portfolio is recession-proof. Here are a few steps that you could take right now with inflation still soaring:

1. Invest for the long-term: It’s important to zoom out on your investments and keep in mind the perspective that investing is a long game.
2. Seek defensive stocks: You may want to change the allocations within your portfolio to invest in defensive stocks to protect yourself.
3. Know yourself and your risk tolerance: If you panic when the market slides, then you have to evaluate your strategy. You may want to build a more balanced portfolio.

Remember that a recession won’t last forever. The economy has historically always bounced back no matter how dark times appear.

How Should You Be Investing?

Even though it’s possible to still find winners in the stock market, it is a challenging task at best, and there are many risks involved with investing right now.

There are ways to make your portfolio more defensive, and less exposed to risk. Take a look at Q.ai’s Inflation Kit, and protect your investments from dropping in value so that you don’t have to worry about checking the market report daily.

Bottom Line

The good news is that even though the stock market is down, it doesn’t mean that every company is suffering. The bad news is that we can’t guarantee the stocks we listed or the industries we mentioned will continue to increase in value.

Nobody can predict the stock market’s future. At the end of the day, we’re all just trying to predict what will happen next based on the information we have. This is why Q.ai uses artificial intelligence to scours the markets for the best investments for all manner of risk tolerances and economic situations. Better still, you can activate Portfolio Protection at any time to protect your gains and reduce your losses.

Download Q.ai today for access to AI-powered investment strategies. When you deposit $100, we’ll add an additional $100 to your account.