When the COVID-19 pandemic hit the United States, the stock market took a quick and sudden dive. But not all companies and industries reacted the same way. In fact, some recession-proof industries are booming in the wake of the virus.
Here’s a look at investing recession-proof industries that can benefit from COVID-19. From online meetings to well-stocked refrigerators, companies in these industries could have very healthy futures thanks to the new way of life. Read more to learn about businesses that do well in recessions, particularly the downturn we are facing today.
In this guide:
How COVID-19 Is Impacting the Economy
The coronavirus has led to arguably the largest economic downturn since the Great Depression ended in the early 1930s. In early May, a report from the Labor Department showed the unemployment rate rose to 14.7%. More than 20 million jobs were lost in April alone.
With tens of millions unemployed and hundreds of millions staying home a lot more than they did in February, the economy may have changed forever. But while some businesses have borne the brunt of the COVID crisis, others are experiencing massive growth.
If you understand the long-term effects of the coronavirus, you can adjust your investment portfolio to capture the profits.
Four Recession-Proof Industries That Can Benefit From COVID-19
If you’re looking for sectors of the market that are on the way up thanks to new consumer habits and needs, here are some of the key places to look:
The biggest impact on many households is a lot more time at home. That means working at home, eating at home, and exercising at home. While travel stocks have taken a hit, stay-at-home industries are doing well.
Instead of going to smaller retail stores, many shoppers have moved online:
- Industry titans like Amazon and Walmart have seen online sales surge due to the virus.
- Even mass retailers and grocery stores like Costco, Target, Kroger, and Albertsons should farewell. After all, grocery stores are selling food and consumer goods like toilet paper as fast as they can stock the shelves.
- Consider delivery services like Grubhub and food shipping services like Blue Apron. Companies like Uber, which rely on both ride-sharing and food delivery, are more of a mixed bag. And don’t forget about pizza! Papa John’s and Domino's are busy companies these days.
- While eating those pizzas, consumers are busy watching Netflix, Disney+, Hulu and other streaming apps. They could also be listening to Spotify or Pandora. All of these entertainment services come from public companies that are likely to experience record sales and demand.
If you’re looking for a place to invest in these stay-at-home industries, Public is a robo advisor that offers commission-free trades on stocks and exchange-traded funds (ETFs). With Public, you can browse company stocks by theme, such as their recently launched “Stay at Home” theme that includes many of the companies I mentioned.
Toilet paper, bleach, detergent, and dish soap are all in high demand. Americans are working to kill the virus before it enters their homes. And more cooking means more demand for kitchen-related items.
Conglomerates like Proctor & Gamble, Unilever, Johnson & Johnson and Kimberly-Clark all make products that are in high demand no matter what the economy is doing. These recession-proof industries are doing even better today.
Working from home has been a growing trend for years. But the virus catapulted it from a rarity to the norm. Almost all office workers in the United States have tried out working at home. Going forward, we can expect many workers will stay home or work from home part-time.
Computer and technology companies are the big winners here. Zoom, a public company, is now synonymous with conference calls. Microsoft, Google and Apple all provide work and productivity products to keep businesses running remotely. These major companies also offer cloud computing and hosting, which are in heavy demand with everyone staying at home.
Technology is already a big part of our lives. In the post-COVID era, it’s going to be even more important.
Utilities and Telecommunications
The infrastructure that connects our phones, computers, TVs and IoT (internet-of-things) devices to the internet comes from utility and telecommunications companies. Mobile phone providers are also a good bet.
Pure telecom companies in the United States include AT&T, Verizon, Comcast, Charter, Sprint, CenturyLink, Cox, Frontier, and Windstream. T-Mobile and Sprint have combined to create the third-largest U.S. wireless carrier. Those wireless airwaves are definitely busy in the COVID world.
Content-heavy apps and services like Netflix, Zoom, and online games are sure to send the demand for telecom services up for years to come.
Prepare Your Portfolio for the Future of Investing
While no portfolio is completely recession-proof, adding businesses that do well in a recession to your investments can lead to great investment results. If you are a behavioral investor, you likely see these and many more opportunities for investment gains.
If you can find undervalued stocks in the current market, you’re setting yourself up for long-term investment success. That’s a smart move in an uncertain financial future.