I have identified two FTSE stocks I believe are recession-proof.
Before I dive into my stock picks, what’s this talk about a recession? Well, soaring inflation and rising interest rates, which have led to a cost of living crisis, has many believing we are heading for a recession. As a savvy investor with a clear investment strategy, I want to ensure my hard-earned cash is protected.
FTSE stock #1
Consumer goods powerhouse Unilever (LSE:ULVR) has a portfolio of brands that span food, drink, home care, and beauty products. It has a worldwide presence and profile and many of its goods are considered essential products to day-to-day life.
No matter the current economic climate, consumers will need essential items from its portfolio of brands. This is why I feel a company like Unilever may experience minor issues if any recession were to occur, but would ultimately continue to perform well.
Let’s take a closer look at the current state of play with Unilever. The shares are currently trading for 3,661p, which is 14% lower compared to this time last year when the shares were trading for 4,281p.
The rising cost of raw materials as well as the supply chain crisis are credible risks towards Unilever’s growth, performance, and returns. These elements could squeeze profit margins and affect sales too.
I believe the Unilever share price has fallen, like many other FTSE stocks, due to the stock market correction and macroeconomic headwinds. This has presented me with an opportunity, however. The shares look even better value for money on a price-to-earnings ratio of 19. The shares also pay a dividend to boost my passive income stream with a yield of to 4%. Dividends can be cancelled at any time, however.
Investor returns are underpinned by performance and Unilever has a good track record of performance growth. I do understand that past performance is not a guarantee of the future, however.
Pick #2
Associated British Foods (LSE:ABF) is a group of businesses that operate in five segments. These are sugar, agriculture, retail, grocery, and ingredients. It is one of the biggest food producers in the world, of sugar and bakers yeast to be specific.
Like Unilever, ABF has defensive attributes, as food is an essential item consumers will need despite the economic outlook.
So what’s happening with ABF shares? As I write, they are currently trading for 1,665p. At this time last year, the shares were trading for 2,287p, which is a 27% drop over a 12-month period. Again, macroeconomic issues and the stock market correction have affected ABF and other FTSE shares and caused them to drop.
The rising cost of materials and the supply chain crisis could have an impact on ABF’s performance, profitability, and returns.
ABF shares look good value for money on a price-to-earnings ratio of 16. The FTSE 100 average is 15. The shares also offer a passive income stream with a dividend yield of just less than 3%. ABF’s performance track record is also favourable, with a history of growth in revenue and profit. This performance is vital to growth and investor returns.