In this article, we will take a look at the 10 Best Stocks to Invest in During a Recession.
Geopolitical tensions are once again having a severe impact on the economic conditions and on investors’ decisions in the market as well. CNBC reported on February 28, 2026, that a joint U.S. and Israeli attack on Iran is raising significant concerns about global energy security and economic stability.
According to Bob McNally, a former White House energy advisor, a prolonged closure of the Strait of Hormuz is guaranteed to cause a global recession. Based on data from the energy consulting firm Kpler, over 60% of the world’s seaborne crude exports flowed through the Strait in 2025. At this point, Tehran’s possession of large stockpiles of mines and missiles has the potential to make the commercial route unsafe. With these threats, McNally warns that oil prices could spike above $100 per barrel, triggering a bidding war and an economic downturn.
While this looming shadow of a downturn is generally viewed as a danger to capital, some seasoned investors have historically perceived these periods as windows of opportunity. Howard Marks, Co-Chairman of Oaktree Capital Management, has made the following observation in his book Mastering the Market Cycle.
The safest (and most rewarding) time to buy usually comes when everyone is convinced there’s no hope.
Given this backdrop, we will examine the 10 best stocks that could strengthen the portfolio during a recession.
Our Methodology
To identify the 10 best stocks to invest in during a recession, we analyzed the S&P 500 index. We prioritized stocks from the defensive sector with the lowest historic drawdowns over the past decade, spanning from January 2016 to January 2026. By considering defensive stocks and potential drawdowns from the last decade, we ensured our list included stocks that showed relative price stability despite market stresses such as COVID. We then ranked the stocks by the number of hedge funds holding a stake in each. We limited our final selection to companies that have recently reported noteworthy developments likely to impact investor sentiment. All the pricing data are current as of market close on March 5, 2026.
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).
10. Alliant Energy Corporation (NASDAQ:LNT)
Number of Hedge Fund Holders: 42
Alliant Energy Corporation (NASDAQ:LNT) is one of the 10 best stocks to invest in during a recession.
On February 23, 2026, BMO Capital raised its price target on Alliant Energy Corporation (NASDAQ:LNT) from $72 to $78 while maintaining an Outperform rating. The update comes after the company posted its Q4 results. The firm noted that the company has signed a new agreement, moving the QTS Madison project to Iowa without changing its consolidated capital plan. For the rating, the firm cited the regulatory calendar’s timing and the potential for upward revisions to earnings per share.
Separately, on February 22, 2026, Wells Fargo raised the price target on Alliant Energy Corporation (NASDAQ:LNT) from $71 to $75 and maintained an Overweight rating on its stock. According to the firm, the company’s updates have been solid. It finds the company’s data center growth attractive and further cites the lack of major rate cases during an election period.
CNN recorded a Buy rating on Alliant Energy Corporation (NASDAQ:LNT) from 7 of 14 analysts covering the stock. The 1-year average price target currently indicates a 3.73% upside potential as of March 5, 2026.
Founded in 1917, Alliant Energy Corporation (NASDAQ:LNT) is a public utility holding company serving the American Midwest. The company operates from its headquarters in Wisconsin.
9. WEC Energy Group, Inc. (NYSE:WEC)
Number of Hedge Fund Holders: 43
WEC Energy Group, Inc. (NYSE:WEC) is one of the 10 best stocks to invest in during a recession.
On March 4, 2027, KeyBanc analyst Sophie Karp raised the price target on WEC Energy Group, Inc. (NYSE:WEC) from $117 to $126, maintaining an Overweight rating following a strong Q4 performance. The firm noted that the company’s adjusted EPS beat expectations, and management reaffirmed its FY26 guidance. Additionally, WEC Energy Group, Inc. (NYSE:WEC) has reiterated its long-term EPS growth target of 7%–8%, with growth expected to accelerate in 2028.
In another event, on February 23, 2026, WEC Energy Group, Inc. (NYSE:WEC) announced entering into an agreement that expands its 4.75% Senior Notes due 2028 by issuing an additional $400 million. The new Notes form part of the same series as the $450 million of 4.75% Senior Notes issued on January 11, 2023. With this new issuance, the company raised the series total to $850 million. The company intends to use the proceeds to secure long-term capital for utility operations and infrastructure investments. The issuance increases total debt, but the consolidated series potentially improves liquidity and pricing transparency for investors.
Founded in 1896, WEC Energy Group, Inc. (NYSE:WEC) is a leading Midwest utility holding company that provides regulated electricity and natural gas. Its headquarters is in Wisconsin.
8. Duke Energy Corporation (NYSE:DUK)
Number of Hedge Fund Holders: 51
Duke Energy Corporation (NYSE:DUK) is one of the 10 best stocks to invest in during a recession.
On February 11, 2026, Duke Energy Corporation (NYSE:DUK) saw its price target raised by BMO Capital by $4 to $136. The firm’s analyst James Thalacker kept an Outperform rating on the shares. In the research note, the firm noted the company’s operating earnings beat was modest. The analyst further pointed to an EPS growth rate in the range of 5%-7% through 2030, with the upper end of the range anticipated before the end of 2028.
Prior to this, on February 20, 2026, Morgan Stanley raised its price target on Duke Energy Corporation (NYSE:DUK) from $130 to $139, while maintaining an Equal Weight rating on the shares. The new price target was part of the firm’s overall re-evaluation of the prices for Regulated & Diversified Utilities and IPPs stocks covered by Morgan Stanley in North America for January. The firm noted utility underperformance in January and anticipates a balanced discussion concerning data center pipelines against rising affordability and political risks in its fourth-quarter earnings preview.
Founded in 1904, Duke Energy Corporation (NYSE:DUK) is one of the largest energy holding companies in the U.S., providing electricity and natural gas to over a million customers. Its headquarters is in North Carolina.
7. CMS Energy Corporation (NYSE:CMS)
Number of Hedge Fund Holders: 52
CMS Energy Corporation (NYSE:CMS) is one of the 10 best stocks to invest in during a recession.
On March 2, 2026, CMS Energy Corporation (NYSE:CMS) saw its price target from KeyBanc raised from $79 to $83 by the firm’s analyst Sophie Karp while keeping an Overweight rating on the stock. This update follows multiple meetings between investors and management. Most of the discussions focused on Michigan’s prevailing regulatory environment and the upcoming gubernatorial election. Additionally, the firm analyzed the data center pipeline and the company’s outlook for developments in large-load customer mix and long-term capital expenditure requirements.
Prior to this, on February 27, 2026, CMS Energy Corporation (NYSE:CMS) recorded notable insider activity from one of its executives. The company’s Director, Diane Leopold, purchased 2,000 shares of the company’s stock. The purchase was valued at approximately $153,380. A few days before this transaction, the company witnessed significant sales from another official. On February 23, 2026, the company’s Director, John G. Russell, disclosed the sale of 14,914 shares of CMS Energy Corporation (NYSE:CMS)’s stock in a transaction valued at $1,129,735.
Founded in 1987, CMS Energy Corporation (NYSE:CMS) is a leading Michigan-based utility provider that serves over 3.5 million electric and gas customers.
6. Amgen Inc. (NASDAQ:AMGN)
Number of Hedge Fund Holders: 70
Amgen Inc. (NASDAQ:AMGN) is one of the 10 best stocks to invest in during a recession.
On February 27, 2026, Amgen Inc. (NASDAQ:AMGN)’s Phase 3 study (NCT05907122) saw an update. The study investigating ABP 206, a biosimilar candidate for Opdivo (nivolumab), has officially reached Completed status. The trial enrolled 256 subjects with resected stage III or IV melanoma to demonstrate pharmacokinetic similarity and clinical efficacy over a 12-month adjuvant period. The primary completion was reached in March 2025, and final updates were posted in late February 2026. Data is likely being analyzed to support regulatory filings. If successful, ABP 206 could establish Amgen Inc. (NASDAQ:AMGN) as a key provider of lower-cost immunotherapy for advanced melanoma.
On February 19, 2026, Wells Fargo raised the price target on Amgen Inc. (NASDAQ:AMGN) from $325 to $375 while maintaining an Equal Weight rating. The firm is revising its valuation model to incorporate 10-K financial updates. It also noted that it is assigning new price targets to reflect the additional value of its Phase 3 pipeline assets.
Founded in 1980, Amgen Inc. (NASDAQ:AMGN) is a leading global biotechnology company focused on discovering, developing, and manufacturing innovative human therapeutics for serious illnesses. Its headquarters is in California.
5. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 87
The Coca-Cola Company (NYSE:KO) is one of the 10 best stocks to invest in during a recession.
On February 19, 2026, The Coca-Cola Company (NYSE:KO) announced the election of Todd Beiger as a new vice president, effective March 31, and the Board’s approval for the 64th consecutive increase in annual dividend. The company raised its quarterly dividend by 4% from 51 cents to 53 cents per share, leading to an annual dividend increase of $2.12 per share, up from $2.04 in 2025. Shareholders of record as of March 13, 2026, will be eligible for the quarterly dividend payable on April 1, 2026.
In a more recent development, on March 3, 2026, two top executives at The Coca-Cola Company (NYSE:KO) disclosed that they had cashed out a significant portion of their ownership in the company. The company’s Executive Vice President, Beatriz Perez, sold 21,326 shares of the company’s stock. The sale generated approximately $1,727,406 for the EVP. Separately, The Coca-Cola Company (NYSE:KO)’s President and Chief Financial Officer, John Murphy, offloaded 130,633 shares of the company’s stock in a transaction valued at $10,517,405.
Founded in 1886, The Coca-Cola Company (NYSE:KO) is a global beverage company with a portfolio of 200+ brands, with headquarters in Georgia.
4. The Procter & Gamble Company (NYSE:PG)
Number of Hedge Fund Holders: 90
The Procter & Gamble Company (NYSE:PG) is one of the 10 best stocks to invest in during a recession.
On February 27, 2026, a Citi analyst maintained a Buy rating on The Procter & Gamble Company (NYSE:PG) while keeping a price target of $181.
In another development, on February 17, 2026, the company’s Chief Research, Development & Innovation Officer, Moses Victor Javier Aguilar, made a significant cash-out by selling 15,169 shares of The Procter & Gamble Company (NYSE:PG) stock. The sale generated $2,461,473 for Moses. Separately, on February 17, 2026, Wells Fargo raised its price target on The Procter & Gamble Company (NYSE:PG) from $165 to $177 while maintaining an Overweight rating. The firm noted the growth in Staples’ performance, calling it historic and one that rivals the S&P 500.
As of March 5, 2026, CNN noted that 54% of 28 analysts maintained a Buy rating on The Procter & Gamble Company (NYSE:PG), with a 1-year average upside potential of 8.02%.
Founded in 1837, The Procter & Gamble Company (NYSE:PG) is a consumer goods giant with popular brands like Tide and Pampers. Its headquarters is in Ohio.
3. Johnson & Johnson (NYSE:JNJ)
Number of Hedge Fund Holders: 104
Johnson & Johnson (NYSE:JNJ) is one of the 10 best stocks to invest in during a recession.
On February 26, 2026, Johnson & Johnson (NYSE:JNJ) provided an update, reporting promising Phase 1b data for pasritamig, a pioneering bispecific T-cell engager, combined with docetaxel for metastatic castration-resistant prostate cancer. The study was unveiled at the 2026 ASCO GU Symposium. The results showed no unexpected safety concerns, thereby mirroring docetaxel’s profile alone. Critically, the combination achieved durable reductions in prostate-specific antigen (PSA). According to Charles Drake, Vice President, Prostate Cancer and Cross Cancer Immuno-Oncology, Johnson & Johnson (NYSE:JNJ), this success has strengthened the company’s foundation for Phase 3 development.
The ability to combine pasritamig with docetaxel, where prior approaches in the field have fallen short, gives us a strong foundation for Phase 3 development.
In another development, on February 24, 2026, Johnson & Johnson (NYSE:JNJ) announced that it had submitted a supplemental Biologics License Application to the U.S. FDA for IMAAVY® (nipocalimab-aahu). If approved, it would be the first treatment for warm autoimmune hemolytic anemia (wAIHA). The company’s Phase 2/3 ENERGY trial data indicated a rapid, durable hemoglobin response and significant improvement in fatigue for patients treated with the therapy.
Johnson & Johnson (NYSE:JNJ), founded in 1886, is a global multinational pharmaceutical, biotechnology, and medical technologies company, operating through two segments: Innovative Medicine (pharmaceuticals) and MedTech (medical devices). Its headquarters is in New Jersey.
2. Costco Wholesale Corporation (NASDAQ:COST)
Number of Hedge Fund Holders: 106
Costco Wholesale Corporation (NASDAQ:COST) is one of the 10 best stocks to invest in during a recession.
On February 27, 2026, Costco Wholesale Corporation (NASDAQ:COST) received a Neutral rating from Citi, maintained by analyst Steven Zaccone, with a price target of $1,000. Previously, on February 20, 2026, Steven raised the stock’s price target from $990 to $1,000, citing a modest beat in same-store sales and earnings during the fiscal second quarter.
Separately, Bank of America re-initiated coverage on Costco Wholesale Corporation (NASDAQ:COST) with a Buy rating and a price target of $1,185 on February 27, 2026. The firm’s analyst noted that Costco Wholesale Corporation (NASDAQ:COST) has strong appeal among high-income consumers, offering a highly competitive price that pleases shoppers who prioritize value. According to BofA, this appeal strengthens the company’s position as a leader in the K-shaped economy.
As of March 5, 2026, CNN recorded a consensus Buy rating from 37 analysts covering Costco Wholesale Corporation (NASDAQ:COST). The 1-year median upside potential stands at 9.26%.
Founded in 1983, Costco Wholesale Corporation (NASDAQ:COST) is a leading American multinational membership-only warehouse club operator headquartered in Washington.
1. Walmart Inc. (NASDAQ:WMT)
Number of Hedge Fund Holders: 114
Walmart Inc. (NASDAQ:WMT) is one of the 10 best stocks to invest in during a recession.
On February 27, 2026, one of Walmart Inc. (NASDAQ:WMT)’s significant shareholders, The Walton Family Holdings Trust (ownership greater than 10%), disclosed a major insider move, selling 1,723,236 of the company’s shares in a transaction valued at approximately $220 million. With this move, The Walton Family Holdings Trust has executed its second major Informative Sell of 2026. Following sixteen similarly significant transactions in 2025, this recent sale signals a continued reduction in ownership. However, even with these sales, the trust remains one of the most powerful stakeholders, maintaining notable control over Walmart Inc.’s (NASDAQ:WMT) strategic voting power.
In a separate event, on February 26, 2026, Reuters reported that Walmart Inc. (NASDAQ:WMT) had agreed to a $100 million settlement with the FTC and 11 states. The allegations included deceptive earnings practices within its Spark Driver program that resulted in its drivers losing millions in earnings. According to a spokesperson for Walmart Inc. (NASDAQ:WMT), the company is working with affected drivers and will provide further payments as necessary.
Founded in 1962, Walmart Inc. (NASDAQ:WMT) is one of the world’s largest retailers, operating a massive global network of hypermarkets, discount stores, and Sam’s Club warehouses. Its headquarters is in Arkansas.
While we acknowledge the potential of WMT to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than WMT and that has 100x upside potential, check out our report about this cheapest AI stock.
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