Best Recession Proof Stocks to Invest

Elevated interest rates, slowing economic growth and the possibility of steep tariffs have some investors concerned a recession may be coming. When the economy tanks, even most high-quality stocks get dragged down with it. However, during the past two U.S. recessions in 2008 and 2020, there were still a handful of stocks that significantly outperformed the S&P 500. These recession-resistant stocks might help investors play defense if the U.S. dips into a recession in 2025.

Here are seven stocks CFRA analysts recommend that outperformed the S&P 500 in both 2008 and 2020 (returns include dividends, if offered):

Stock	Upside Potential*
Walmart Inc. (ticker: WMT)	8.2%
Netflix Inc. (NFLX)	-1.1%
T-Mobile US Inc. (TMUS)	4.6%
Accenture PLC (ACN)	17.5%
NextEra Energy Inc. (NEE)	29.2%
Synopsys Inc. (SNPS)	16.7%
Arthur J. Gallagher & Co. (AJG)	6.6%

*Based on CFRA 12-month target price and Nov. 12 closing share price.

Best Recession Proof Stocks to Invest

Walmart Inc. (WMT)

It's no surprise that discount retailer Walmart outperformed during each of the past two recession years. Americans can't go without groceries when times get tough, but they can save money by bargain hunting at Walmart. Analyst Arun Sundaram says Walmart's implementation of technology and automation throughout its supply chain positions the company to grow operating income at a higher rate than revenue over the next several years, potentially boosting its profit margins. Sundaram says "flywheel" businesses such as fulfillment services, advertising and subscriptions will increase Walmart's profitability. CFRA has a "buy" rating and $92 price target for WMT stock, which closed at $84.99 on Nov. 12.

S&P 500 performance: 16.3% (2020), -38.5% (2008)
WMT performance: 23.3% (2020), 20% (2008)

Netflix Inc. (NFLX)

At first glance, it may seem strange that video streaming service Netflix, which relies on discretionary spending, would perform so well during times of economic difficulty. Netflix's strength in 2008 and 2020 may have to do with Americans cutting back on pricey entertainment options during financial hardship. Netflix provides access to thousands of shows and movies for as low as $6.99 per month. Analyst Kenneth Leon says Netflix will remain the streaming video market leader and will continue to gain market share from U.S. network TV providers. CFRA has a "buy" rating and $810 price target for NFLX stock, which closed at $819.50 on Nov. 12.

S&P 500 performance: 16.3% (2020), -38.5% (2008)
NFLX performance: 67.1% (2020), 12.4% (2008)

T-Mobile US Inc. (TMUS)

Following its 2020 merger with Sprint, T-Mobile is the second-largest U.S. wireless provider. T-Mobile has generated consistent growth in a challenging industry, even during economic downturns. Analyst Keith Snyder says T-Mobile will continue to outgrow its competitors in an extremely competitive environment. Snyder says T-Mobile has impressive free cash flow potential and churn metrics. He says T-Mobile's aggressive plan pricing, coupled with its significant 5G network advantages over Verizon Communications Inc. (VZ) and AT&T Inc. (T), have allowed it to gain market share. CFRA has a "strong buy" rating and $250 price target for TMUS stock, which closed at $239 on Nov. 12.

S&P 500 performance: 16.3% (2020), -38.5% (2008)
TMUS performance: 71.9% (2020), -23.6% (2008)

Accenture PLC (ACN)

Accenture is a global information technologies services firm. The company generates nearly half its revenue from North America, about a third from Europe and the remainder from other parts of the world. Accenture's diversified consulting and services business made it recession resistant in the past and will likely continue to do so in the future. Analyst Brooks Idlet says Accenture is a leader in cloud migration and generative AI technology. Brooks says Accenture's combination of managed services and consulting businesses helps it outperform even in challenging macroeconomic environments. CFRA has a "strong buy" rating and $424 price target for ACN stock, which closed at $360.61 on Nov. 12.

S&P 500 performance: 16.3% (2020), -38.5% (2008)
ACN performance: 26% (2020), -7.5% (2008)

NextEra Energy Inc. (NEE)

NextEra Energy is a utility holding company and is the parent of Florida Power & Light and NextEra Energy Resources. Utility sector stocks are generally considered defensive investments and are popular flight-to-safety plays during economic downturns. Utility companies have stable and predictable demand and cash flows, as well as limited competition. Analyst Daniel Rich says NextEra benefits from a favorable regulatory environment and has both a strong balance sheet and an attractive growth profile. CFRA has a "buy" rating and $96 price target for NEE stock, which closed at $74.26 on Nov. 12.

S&P 500 performance: 16.3% (2020), -38.5% (2008)
NEE performance: 30.1% (2020), -23.5% (2008)

Synopsys Inc. (SNPS)

Synopsys provides a platform on which engineers can design and test semiconductor chips and other software applications. The global semiconductor industry is a secular growth market, so demand for chip testing and design services is constant – even during an economic downturn. Idlet says Snyopsys has a long earnings and revenue growth runway in the coming years. He says Synopsys is the market leader in electronic design automation, with a more than 30% share. In addition, about 80% of its revenue is recurring, providing stability in an economic downturn. CFRA has a "buy" rating and $646 price target for SNPS stock, which closed at $553.47 on Nov. 12.

S&P 500 performance: 16.3% (2020), -38.5% (2008)
SNPS performance: 86.2% (2020), -28.6% (2008)

Arthur J. Gallagher & Co. (AJG)

Arthur J. Gallagher is one of the world's largest international insurance brokers and risk management service providers. Because people and businesses still need insurance even during an economic downturn, the insurance industry is generally considered to be recession resistant. Analyst Catherine Seifert says Arthur J. Gallagher's acquisition strategy and pricing gains have contributed to its revenue growth momentum. Seifert projects the company will continue to outgrow and outperform peers in coming years, providing a bullish catalyst for the stock and justifying a premium valuation. CFRA has a "buy" rating and $315 price target for AJG stock, which closed at $295.27 on Nov. 12.

S&P 500 performance: 16.3% (2020), -38.5% (2008)
AJG performance: 32.1% (2020), 12.6% (2008)

What Are Recession Proof Stocks?

Recession-proof stocks refer to shares of companies or industries that are considered resilient to the adverse effects of an economic downturn. While no investment is entirely immune to market fluctuations, these stocks tend to outperform the broader market during challenging economic times.