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FedEx Corporation (FDX), Macy’s, Inc. (M): Best Stocks for a Possible Recession

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An inevitable showdown in Congress about raising the national debt ceiling at the end of next month will once again trigger fears of a possible government shutdown — and talk of going into another recession. Investors have endured this speculation before, and the market almost seems to thrive during these times. Still, nobody could be blamed for wanting to play it safe.

Fortunately, there’s plenty of businesses that are continuing to thrive even as the American economy has been sputtering along in its recovery. Even if the impending doomsday scenario never comes to be on September 30, here are three stocks that you can feel good about in the long-term.

Shipping

FedEx Corporation (NYSE:FDX)FedEx Corporation (NYSE:FDX) said in June that it expected full-year earnings to increase as much as 13% as the company continues to cut $1.7 million in costs. Roughly 3,600 workers will accept a voluntary buyout program, and shares closed at $110.00 on August 1. The day’s high of $110.33 bested a 52-week high of $109.66 despite concerns about revenue as more international shippers are moving to competing two-day or three-day delivery services.

It has not been overnight jets that have helped FedEx Corporation (NYSE:FDX) exceed analyst estimates. Instead, Reuters reported that the company’s operating income from ground shipments increased 13% to $557 million. For its 2013 fiscal year, FedEx reported a 3.7% increase in revenue.

The company has said that in fiscal 2014, it projects “moderate” earnings per share growth of 7% to 13% from fiscal 2013’s adjusted results. The company also projects the world economy will grow 2.7% during that time, an estimate that is even lower than the World Bank’s forecast for 3% global growth. While the cost benefits would not kick in until 2015, positive signs still abound for the company as it boasts a 9.74% return on equity, free cash flow growth is encouraging and FedEx Corporation (NYSE:FDX) — founded at the beginning of a severe two-year recession in 1973 — has weathered difficult times before.

Retail

The thought of a recession would ordinarily make most investors write off a higher end retailer like Macy’s, Inc. (NYSE:M), but the company’s stock price has increased each of the past five years despite lackluster U.S. economic figures. Over the past three months, Macy’s strong trading activity has made its stock performance look impressive in comparison to department store rivals Wal-Mart and Costco.

Macy’s, Inc. (NYSE:M) closing price of $49.27 on August 1 continues a more than 40% increase over the past year. Similarly, the company’s internet sales have also grown by about 40% each of the last two years after Macy’s 2009 restructuring eliminated personnel and changed operational structure. The company’s estimated 14.2% growth in 2013 and its 2.1% dividend yield certainly places it ahead of retail competitors. Currently, Macy’s is strategically increasing the number of stores that can service web orders from fewer than 300 to over 500.

If you want any sign of how Macy’s, Inc. (NYSE:M) is faring against its competition, look to the company’s attempt to block Martha Stewart Living Omnimedia from selling bedding, cookware and other home goods at rival J.C. Penney. Macy’s stock is up 26% year-to-date while shares of Penney are down 30% in the same period.

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