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Elevated interest rates, lingering inflation and an inverted U.S. Treasury yield curve have 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 2024.
Here are seven stocks CFRA Research analysts recommend that outperformed the S&P 500 in both 2008 and 2020:
| Stock | Implied upside from Nov. 27 Closing Price |
| Walmart Inc. (ticker: WMT) | 16.1% |
| Abbott Laboratories (ABT) | 10% |
| Synopsys Inc. (SNPS) | 3% |
| Accenture PLC (ACN) | 2.6% |
| T-Mobile US Inc. (TMUS) | 17.6% |
| Walt Disney Co. (DIS) | 10.3% |
| Netflix Inc. (NFLX) | 10.6% |
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 has alleviated its cost and supply chain issues, and the company is now positioned to grow its operating income at a higher clip than its revenue in the next several years. Sundaram says automation technology and high-margin businesses such as advertisement and fulfillment services will boost profitability over time. CFRA has a “buy” rating and $182 price target for WMT stock, which closed at $156.77 on Nov. 27.
S&P 500 outperformance: 5.1% (2020), 56.3% (2008)
Abbott Laboratories (ABT)
Abbott Laboratories is a diversified health care products company. It’s understandable why many health care stocks performed well during the pandemic in 2020, but Abbott’s shares actually outperformed by an even wider margin in 2008. Analyst Sel Hardy says Abbott has an innovative, diversified business and a strong balance sheet. Hardy says the company’s strong track record of performance coupled with its growing dividend will help Abbott outperform health care peers in the long term. He says Abbott should return to positive revenue growth in 2024. CFRA has a “buy” rating and $113 price target for ABT stock, which closed at $102.71 on Nov. 27.
S&P 500 outperformance: 9.8% (2020), 33.6% (2008)
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. Analyst Brooks Idlet says Synopsys is attractively valued given its revenue and earnings growth profile. Idlet says Synopsys is the market leader in electronic design automation with a roughly 31% share, and the company will continue to benefit from increasingly complex chip design. CFRA has a “buy” rating and $560 price target for SNPS stock, which closed at $543.53 on Nov. 27.
S&P 500 outperformance: 70% (2020), 9.9% (2008)
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 Keith Snyder says Accenture’s track record of industry-leading earnings growth, its pristine balance sheet and its large base of loyal customers make it an excellent defensive investment during periods of macroeconomic uncertainty. CFRA has a “strong buy” rating and $341 price target for ACN stock, which closed at $332.43 on Nov. 27.
S&P 500 outperformance: 7.8% (2020), 29.5% (2008)
Following its merger with Sprint, T-Mobile is now the third-largest U.S. wireless provider by subscriber count. T-Mobile has generated consistent growth in a challenging industry, even during economic downturns. Snyder says T-Mobile will continue to outgrow and gain market share from Verizon Communications Inc. (VZ) and AT&T Inc. (T), and the company’s free cash flow potential is impressive. He says its 5G network is at least a year ahead of the networks of its top two competitors. T-Mobile also estimates total Sprint merger synergies of a whopping $70 billion. CFRA has a “strong buy” rating and $175 price target for TMUS stock, which closed at $148.80 on Nov. 27.
S&P 500 outperformance: 55.7% (2020), 14.8% (2008)
Walt Disney is one of the largest and most diversified media and entertainment companies in the world. That diversification has helped Disney’s business remain in high demand during a wide range of economic conditions, including a global pandemic. Even when Disney’s theme parks, cruise business, and movie and TV studios were shut down in 2020, Disney+ streaming subscriptions surged. Analyst Kenneth Leon says Disney assets such as ABC, FX and other linear TV networks hold tremendous value, and the company could potentially unlock that value via strategic realignment. CFRA has a “buy” rating and $105 price target for DIS stock, which closed at $95.17 on Nov. 27.
S&P 500 outperformance: 9% (2020), 8.8% (2008)
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 more pricey entertainment options during financial hardship. Netflix provides access to thousands of shows and movies for as low as $6.99 per month. Leon says the ongoing shift in viewership from linear TV to streaming platforms will continue to be a long-term tailwind for Netflix. CFRA has a “buy” rating and $530 price target for NFLX stock, which closed at $479.17 on Nov. 27.
S&P 500 outperformance: 50.9% (2020), 50.8% (2008)
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