Recessions are a fairly common occurrences, yet it can still be a harrowing experience if you’re not mentally prepared. Since 1929, the U.S. economy has dipped into recession 15 times, or roughly once every six years. Yet even as nerve-racking as a recession can be, having a portfolio stocked with companies that can weather these inevitable downturns as well as thrive during prosperous economic times can help investors endure the uncertainty…
With that in mind, let’s look at three stocks that have proven their mettle during the recent downturn, but also offer tremendous growth opportunities in the months and years to come.
Apple: The poster child for recession resistance?
Even as the 2020 recession savaged many technology companies, Apple (NASDAQ:AAPL) was one of the few that wasn’t hit as hard. The resilience of its customer base and the ongoing expansion of its services segment helped buffer the company’s results during the downturn.
Even at the height of the economic uncertainty, the iPhone maker was able to modestly increase its revenue, while many companies saw sales plummet. This was driven by an all-time record from its services segment and a quarterly record for wearables. The recurring nature of its services revenue will help insulate Apple during any future recession.
That’s not all Apple has going for it. Even as the company works toward its well-publicized plans to be cash neutral, Apple still has one of the biggest cash hordes around. The company boasted nearly $193 billion in cash and marketable securities on its balance sheet and roughly $99 billion in debt to close out its most recent quarter.
Finally, we have the benefit of hindsight to judge the performance of Apple’s stock since the stunning market decline that occurred between mid-February and late March. From its peak, the iPhone maker’s shares declined just 31%, while other tech stocks were ravaged, losing half or even two-thirds of their value. From their bottom, Apple shares have come roaring back, climbing 132% as of this writing.
As a result of its soaring stock price, the dividend yield has slipped to 0.63% (as of this writing), but since Apple funds the quarterly payments using just 25% of profits, the payout is still among the safest out there.
Given the many things working in its favor, it would be difficult to find a more fitting stock than Apple to buy during a recession.
Roku: Future recessions will be streamed
One of the undeniable consequences of recessions is unemployment, and with fewer people in the workforce, more people are at home. When those unfortunate folks are not out looking for a job, many will likely be killing time watching streaming video.
That’s where Roku (NASDAQ:ROKU) comes in. The channel-agnostic platform provides access to more than 10,000 channels on its namesake streaming devices. That’s not all. Roku’s connected TV operating system (OS) is a top choice among television manufacturers, and is found in 38% of sets sold in the U.S. and 31% of those sold in Canada — making it the No. 1 selling smart TV OS in both countries.
Those looking for proof that the company will not only survive, but thrive during a recession need look no further than last year, which provides ample evidence of Roku’s resilience. During the first quarter of 2020, Roku’s active accounts climbed 37% year over year, while streaming hours on its platform jumped 49%. The average revenue per user (ARPU) increased 28%, helping drive revenue 55% higher. Those trends continued into the second quarter, as active accounts were up 41% and streaming hours soared 65%. That pushed ARPU up 18%, while revenue climbed 42%.
These metrics helped Roku’s stock recover from an early drubbing. While its lost more than half its value in the early days of the recession, Roku has since been one of the market’s star performers, gaining more than 550% from its bottom in mid-March.
Roku is at a tipping point, on the verge of being consistently profitable as it leverages its growing base of viewers. Additionally, with nearly…
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