In this article, we will be taking a look at the 10 Best Investments During A Recession.
As of early 2026, the U.S. economy is in a fragile “stagflation-lite” phase, balancing resilient growth against an elevated risk of recession. According to major financial organizations like J.P. Morgan and RSM, there is a probability of a formal U.S. recession in 2026 at a rate of 30-35%. Instead of the economy crashing in one big direction, it is more indicative of a K-shaped recovery where technology and AI-driven industries grow, and housing and lower-income consumers experience increasingly stressful situations.
Economic information is conflicting. The U.S. economy is projected to grow at a robust 4.3% annualized rate in Q3 2025, but growth is predicted to slow down to approximately 1.8%-2.2% in 2026. The labor market has been tight historically, with unemployment standing at 4.4% in December 2025, only slightly lower compared to November 2025. Inflation is also continuing to be constant, with Core PCE being 2.8, which has been enabled by the recent fiscal stimulus and the persistence of tariff impacts.
The signs of recession are becoming more and more industry-specific than global. The American housing sector is performing poorly, with home sales at multi-decade lows as the high mortgage rates and the lack of affordability are still taking their toll on demand, home building, and housing industry jobs.
The federal funds rate has been reduced to a range of 3.50%-3.75% following three rate cuts at the end of 2025. The Federal Reserve is expected to pause at the beginning of 2026 ahead of the appointment of a new Chair in May.
By contributing roughly 1.1 percentage points to GDP growth and preventing a more dire economic catastrophe, investments in artificial intelligence have a major stabilizing effect. Consumer spending is predicted to drop in the first part of 2026 as labor income growth slows. If AI-driven productivity increases materialize and inflation returns to the Federal Reserve’s objective, Morgan Stanley economists predict GDP growth of roughly 3.2% by 2027.
With that being said, let’s now look at the best investments during a recession.
Our Methodology
For our methodology, we first looked at stocks from industries like consumer staples, healthcare, and information technology that often perform well during recessions. After that, we reduced the selection to stocks with market capitalization over $10 billion, positive sentiments from analysts, and a consistent dividend payment history. From this list, we selected the top 10 dividend-paying stocks and ranked them in ascending order based on the number of hedge fund holders as of Q3 2025, as tracked by Insider Monkey database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Here is our list of the 10 best investments during a recession.
10. TD SYNNEX Corporation (NYSE:SNX)
Number of Hedge Fund Holders: 35
TD SYNNEX Corporation (NYSE:SNX) stands tenth on our list among the best investments.
TheFly reported on January 9 that UBS analyst David Vogt maintained a Buy rating on SNX and raised the price target from $187 to $193. This update reflects UBS’s optimism over the company’s strategic position. For instance, the Hyve subsidiary is making good headway on AI data center infrastructure, while interest in Windows 11 and AI-capable PCs is driving up PC demand.
Conversely, on January 9, while keeping an Overweight rating, Morgan Stanley analyst Erik Woodring lowered the price target for TD SYNNEX Corporation (NYSE:SNX) from $177 to $172. Although Morgan Stanley is still confident about the company’s long-term prospects, the modified price target reflects a more cautious near-term assessment and acknowledges expected volatility in IT hardware demand and adjacent markets.
Similarly, Barclays analyst Tim Long reduced SNX’s price objective from $164 to $163 on the same day while keeping an Equal Weight rating. The company’s fiscal Q4 earnings exceeded expectations, according to the research report, due to strong software performance, consistent PC demand, and ongoing momentum in its Hyve segment.
TD SYNNEX Corporation (NYSE:SNX) operates at the heart of the technology ecosystem and provides a comprehensive range of products and services from leading vendors like IBM and Cisco. The company’s architecture is designed to help partners capitalize on high-growth areas, including AI integration, hybrid cloud, and data analytics.
9. Monolithic Power Systems, Inc. (NASDAQ:MPWR)
Number of Hedge Fund Holders: 42
Monolithic Power Systems, Inc. (NASDAQ:MPWR) is placed ninth among the best investments.
TheFly reported on December 19, 2025, that Truist Securities raised its price target for MPWR to $1,375 from $1,163 while maintaining a Buy rating. The company’s strength, according to analyst William Stein, is a compelling AI infrastructure derivative bet, which is fueled by its expertise in high-density power delivery for next-generation GPU and XPU platforms that support a multibillion-dollar potential in AI data centers.
Monolithic Power Systems, Inc. (NASDAQ:MPWR) designs, develops, and markets integrated circuits (ICs) for the computing, automotive, industrial, and communications markets. The company specializes in power management solutions that reduce total energy consumption and heat dissipation in high-performance environments.
8. Cardinal Health, Inc. (NYSE:CAH)
Number of Hedge Fund Holders: 55
Cardinal Health, Inc. (NYSE:CAH) is one of the best investments on our list.
TheFly reported on January 9 that Citi upgraded CAH from Neutral to Buy, raising the price target from $190 to $244. Daniel Grosslight, a Citi analyst, offered this upgrade, which shows confidence in the company’s growth of specialist assets in addition to the solid performance of its main pharmaceutical distribution business.
Citi highlighted further expansion of the specialist business of Cardinal Health, Inc. (NYSE:CAH), especially the addition of newly acquired MSO assets such as Solaris Health, which is expected to enhance the efficiency of operations and aid in the increase of revenue. It was announced that the company remains cautious on the Global Medical Products and Distribution (GMPD) business, although it believes that the potential upside exists compared to its own expectation versus the consensus forecasts.
Cardinal Health, Inc. (NYSE:CAH) is a large U.S. healthcare services and products company headquartered in Dublin, Ohio. It distributes pharmaceuticals and medical supplies to hospitals, pharmacies, and clinics globally, and manufactures medical and surgical products. The business operates in two segments: Pharmaceutical & Specialty Solutions and Global Medical Products & Distribution.
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