Recession-Resistant Stocks: Performance Outlook for 2024

Historical Performance During Past Recessions

Procter & Gamble, Walmart, and Johnson & Johnson have demonstrated resilience during past economic downturns. PG has consistently performed well through various challenging periods, while Walmart historically thrives in recessions. JNJ's strong performance in specific segments further underscores its recession-resistant nature.

"Our team continues to execute the strategy with excellence, enabling strong results over each of the past six years pre-COVID, during COVID, through a historic inflationary and a pricing cycle, and through geopolitical tensions." --- (PG, earning call, 2024/Q4)

"And Walmart historically does well in things like recessions. With all these changes in marketplace and convenience, how do you think Walmart would perform if we had another recession?" --- (WMT, conference, 2024/06/25)

"Well, I would just look at the results in the Q1. And if you actually look at the key driver of the 4.8% that we enjoyed within Orthopaedics, which is significantly higher than what we've done historically, it is primarily driven by our performance in the Joint Recon business." --- (JNJ, conference, 2024/05/15)

"business has, we’ve talked about resuming volume growth in most of the major markets and doing that while building margin and simultaneously increasing our investment in these kinds of things, and I don’t see any reason in a--if we do find ourselves in a more difficult environment from a consumer economic standpoint, one of the things we talk about internally is would we change our approach if we either had confidence that things were going to get remarkably better from a consumer standpoint or remarkably worse from a consumer standpoint, would we not want to be in daily use categories where performance drives brand choice?" --- (PG, earning call, 2024/Q4)

"And we think that we are positioned very well, irrespective of whether we're in a more recessionary or more expansionary type period and some of the volatility that may result from that." --- (WMT, earning call, 2025/Q2)

Dividend Stability and Reliability

Verizon and Johnson & Johnson demonstrate strong dividend stability and reliability. Verizon emphasizes a healthy, secure dividend with improving payout ratios and a commitment to future increases. Johnson & Johnson highlights a 62-year streak of dividend increases, underscoring their consistent and reliable dividend policy.

"Our dividend is healthy and secure, and our free cash flow dividend payout ratio continues to improve." --- (VZ, earning call, 2024/Q1)

"We appreciate the value our investors place on the dividend, and we were pleased to announce this morning that our Board of Directors has authorized a 4.2% increase marking our 62nd consecutive year of dividend increases." --- (JNJ, earning call, 2024/Q1)

"Then secondly, continue to put my board in a position to increase our dividend." --- (VZ, conference, 2024/05/21)

"We will build on these successes in the quarters ahead, as we work to deliver value to all of our stakeholders. We will continue to execute on our capital allocation priorities by investing in the business, supporting our dividend and paying down debt." --- (VZ, earning call, 2024/Q2)

Market Sentiment and Investor Confidence

Investor confidence in recession-resistant stocks remains strong, as evidenced by Apple's robust liquidity and significant share repurchase plans, Amazon's long-term AWS commitments, Microsoft's better-than-expected PC market demand, and Berkshire Hathaway's stable utility investments. These indicators reflect positive market sentiment and confidence in these companies' resilience.

"Liquidity and Capital Resources The Company believes its balances of cash, cash equivalents and unrestricted marketable securities, along with cash generated by ongoing operations and continued access to debt markets, will be sufficient to satisfy its cash requirements and capital return program over the next 12 months and beyond." --- (AAPL, sec filing, 2024/Q3)

"In 2023, overall capital investments were $48.4 billion. As I mentioned, we're seeing strong AWS demand in both generative AI and our non-generative AI workloads, with customers signing up for longer deals, making bigger commitments." --- (AMZN, earning call, 2024/Q1)

"In our consumer business, PC market demand was slightly better than we expected, benefiting Windows OEM, while advertising spend landed relatively in line with our expectations." --- (MSFT, earning call, 2024/Q3)

"And frankly, as Warren said, I believe investor owned utilities can be more efficient than government owned utilities. But somebody is going to have to carry it and it can't for long be just the utilities." --- (BRK.B, event transcript, 2024/05/04)

"Given the continued confidence we have in our business now and into the future, our Board has authorized today an additional $110 billion for share repurchases, as we maintain our goal of getting to net cash-neutral over time." --- (AAPL, earning call, 2024/Q2)

Expert Predictions and Forecasts for 2024

Coca-Cola, Johnson & Johnson, and Procter & Gamble are all projecting strong performance for 2024, with Coca-Cola and P&G raising their earnings outlooks and J&J showing confidence in achieving long-term growth goals. These companies' resilience amid external challenges underscores their recession-resistant nature.

"We begin 2024 coming off another solid year in which our company delivered strong growth amid many factors beyond our control from inflation to currency headwinds to geopolitical tensions. We achieved this by focusing on what's in our control and making steady progress on our journey as a total beverage company." --- (KO, event transcript, 2024/05/01)

"PALM BEACH, Fla., Aug. 06, 2024 (GLOBE NEWSWIRE) -- FN Media Group News Commentary - According to a report from Mordor Intelligence, the Alzheimer's Disease Diagnostics And Therapeutics Market size is estimated at USD 7.70 billion in 2024, and is expected to reach USD 10.10 billion by 2029, growing at a CAGR of 5.57% during the forecast period (2024-2029)." --- (JNJ, press release, 2024/08/06)

"The strong results we've delivered in the first three quarters of fiscal 2024 enable us to raise our outlook for core earnings per share and keep us on track to deliver within our fiscal year guidance ranges for organic sales growth, cash productivity, and cash return to shareowners." --- (PG, earning call, 2024/Q3)

"Our underlying effective tax rate for 2024 is now expected to be 19%. All in, we continue to expect comparable earnings per share growth of 4% to 5% versus $2.69 in 2023." --- (KO, earning call, 2024/Q1)

"solid start of the year that puts us in a position of strength for 2024. And it also the sustained progress gives us -- give me great confidence in achieving our long-term growth goals of operational sales compounded annual growth rate of 5% to 7% from 2025 to 2030." --- (JNJ, earning call, 2024/Q1)

Impact of Interest Rates

Higher interest rates have mixed effects on recession-resistant stocks. Coca-Cola and Johnson & Johnson experienced increased income due to higher interest rates on cash balances, while Coca-Cola also faced higher costs from short-term borrowings and derivatives. Procter & Gamble mitigates interest rate impacts through diversified financial strategies.

"The increase was primarily due to the impact of higher interest rates on short-term borrowings and derivative instruments compared to the prior year. Equity Income (Loss) — Net" --- (KO, sec filing, 2024/Q1)

"The increase in income was driven by a lower average debt balance and higher interest rates earned on cash balances. Other" --- (JNJ, earning call, 2024/Q1)

"You look at our commodity basket, you look at our currency basket, and you look at our interest rate basket, those combined offset about 70% of the earnings impact at any given point in time at 95% confidence." --- (PG, conference, 2024/05/14)

"The increases were primarily due to the impact of higher debt balances and higher interest rates on derivative instruments compared to the prior year." --- (KO, sec filing, 2024/Q2)

"Interest (income) expense Interest income in the fiscal six months of 2024 was $759 million as compared to $524 million in the fiscal six months of 2023 primarily due to higher rates of interest earned on cash balances and a higher average cash balance." --- (JNJ, sec filing, 2024/Q2)

Government Policies and Regulations

Changes in government policies and regulations can significantly impact recession-resistant stocks. Companies like Procter & Gamble and Coca-Cola highlight potential negative effects on financial metrics, while Johnson & Johnson sees benefits in enhanced compliance. Microsoft notes the influence of new legislation, such as the EU's AI Act, on operations.

"Government Policies. We are exposed to changes in U.S. and foreign government legislative, regulatory or enforcement policies that can have a negative impact on net sales, net earnings and cash flows." --- (PG, sec filing, 2024/Q4)

"They also say we rely on government regulation that is questionable. This seems an odd perspective when government regulation is the highest authority in each of the markets where we operate." --- (KO, event transcript, 2024/05/01)

"We believe that any effort on behalf of any government to really build integrity and compliance into the health system is a good thing for more fair competition and aligns with our credo and our commitment to compliance across all of the markets in which we participate in." --- (JNJ, earning call, 2024/Q2)

"So in addition to the industry led efforts, we've already seen domestic and regional pieces of legislation start to land such as the European Union's AI Act." --- (MSFT, Fireside Chat, 2024/08/05)

"Government Policies. Our net sales, gross margin, operating margin, net earnings and cash flows could be affected by changes in U.S. or foreign government legislative, regulatory or enforcement policies." --- (PG, sec filing, 2024/Q3)

Technological Advancements

Technological advancements are crucial for businesses to stay competitive, as emphasized by Google. Tesla's innovations in 4680 cells and Microsoft's focus on sustainability and industry-shaping advancements highlight how technology drives resilience and growth, making these stocks potentially recession-resistant.

"The people on this call know that if a technological advancement is not the focus of every business and government, they will be left behind." --- (GOOG, earning call, 2024/Q2)

"They're great partners, and they've done great development work with us and a lot of the advancements in technologies and chemistry we found 4680, they're also putting into their cells." --- (TSLA, earning call, 2024/Q1)

"Judson Althoff highlights recent advancements that are shaping the future of industry: https://t.co/zz3M9X05nB" --- (MSFT, Twitter post, 2024/04/10)

"Thanks to advancements in video understanding, we can take visual search to a whole new level with the ability to ask questions with video." --- (GOOG, event transcript, 2024/06/07)

"So that's things such as advancing sustainability policy, using our climate innovation fund to invest in innovations into new technology solutions, as well as working with other partners around their sustainability commitments as well." --- (MSFT, Fireside Chat, 2024/08/05)