When recessions strike, the share prices of just about every company fall. This is because stocks are forward-looking and tend to overreact to both the upside and the downside. And when recessions do strike, investors rapidly discount negative earnings growth in the form of lower share prices. For some stocks, however — like Walmart (NYSE:WMT) — recessions…
actually strengthen their business model. Walmart stock stands strong because the company has carefully built its brand.
What do I mean? Well, the Walmart brand has stood on top of the idea of value for consumers. It has been that way since the company opened its doors and that message still resonates in a big way today.
Because of this, I believe Walmart is one of the best bear market stocks that can withstand a recession.
Why Walmart Stock Is a Recession-Proof Pick
Walmart stock is recession-proof for several reasons.
First, as I said before, WMT has always focused on value for the consumer. It’s a low-price leader, a strategy that resonates especially well during recessions.
Second, the company has invested billions of dollars into its e-commerce platform in recent years, prioritizing convenience and further enhancing its value proposition. More specifically, WMT bought Jet.com back in 2016. Although the service itself has since been shut down, the company used Jet’s logistical knowledge to setup its own e-commerce business. Now, WMT sees massive e-commerce sales growth, including a staggering 79% gain in the U.S. over the most recent quarter.
And third, Walmart has managed to situate itself with the right merchandising assortment — from groceries to big ticket electronics to clothing. That makes it a one-stop shop for just about anything a consumer could need.
The end result of all of these factors is a history of earnings resiliency and dividend growth during all economic periods. That’s quite rare in the stock market. When other stocks are suffering from weak economic conditions, WMT generally thrives.
For instance, during the Great Recession — the worst downturn the U.S. had seen since the 1930s — Walmart managed to…
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