In this article, we will discuss the 15 Best Stocks to Buy During Recession.
As per BlackRock, 2025 started with a bumpy ride for the US stocks. That being said, the asset manager believes that the sentiment has been a critical driver, but fundamentals seem to be healthy. This makes up for an optimistic longer-run outlook. Despite the tariff shocks creating difficult markets, the firm is constructive in its outlook and opines that volatility is an opportunity to capitalize on stock dispersion. Furthermore, Asia continues to exhibit a diversification opportunity for making investments in the AI theme, with equities providing low correlation to US counterparts.
Amidst Worries, There Is a Silver Lining
The trade and tariff uncertainty, which fueled the early-year volatility, advanced at the beginning of Q2 due to the US tariff pronouncements, according to the investment management company. This resulted in a global market meltdown and revived fears related to recession. However, as the quarter progressed, the tariff tensions took a backseat, and there was some optimism visible in the broader US markets. The asset manager believes that, while tariffs remain a critical measure, the potential for market-supporting policies like deregulation and corporate tax cuts provides some room for emergent optimism.
The firm highlighted the importance of an active approach in a bid to capitalize on inefficiencies and to make precise and intentional decisions amidst historic change and transition. While the results of bilateral tariff negotiations remain unpredictable, having a pulse on company dynamics, mainly when the macro picture remains unclear, can act as a differentiator for portfolios.
Policy Measures Likely to Support Moving Forward
The firm opines that corporate strength has supported the US equities’ momentum, and it comes through in earnings and market share. As per the firm, relatively pro-industry policies have stimulated healthy FCF. Several companies throughout different time frames have deployed the cash for future business growth. Even though the policy uncertainty in the current time of transition led to the pause in large investment decisions, the company believes that moves toward deregulation and the reshoring of supply chains once policy gets settled can result in the revival of CapEx spending throughout industries, such as technology and industrials. Despite tariffs dominating, the asset manager expects that deregulation and other policy priorities can regain attention. The high drive for innovation is the long-term secular trend that can support the US equities.
Amidst such trends, let us now look at the 15 Best Stocks to Buy During Recession.
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Our Methodology
To list the 15 Best Stocks to Buy During Recession, we considered the stocks from recession-proof industries such as utilities, consumer defensive, and healthcare. After getting an extensive list of 25-30 stocks, we chose the ones popular among hedge funds. Finally, the stocks were arranged in ascending order of their hedge fund sentiments, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
15 Best Stocks to Buy During Recession
15. Sempra (NYSE:SRE)
Number of Hedge Fund Holders: 34
Sempra (NYSE:SRE) operates as an energy infrastructure company. Bank of America Securities analyst Ross Fowler maintained the bullish stance on the company’s stock, giving a “Buy” rating. The analyst’s rating is backed by the company’s strategic decision. On March 31, Sempra (NYSE:SRE) announced that it intends to sell certain energy infrastructure assets in Mexico and a minority stake in Sempra Infrastructure Partners (Sempra Infrastructure). The sales proceeds are expected to be recycled into its 5-year capital campaign, with an emphasis on its U.S. utilities.
As per the analyst, the sale process is anticipated to pivot the company towards a more focused utility growth model, reducing the non-regulated earnings contributions and improving its valuation. Furthermore, despite some challenges, the analyst believes that progress in LNG export marketing efforts is projected to improve its value, justifying the rating. Sempra (NYSE:SRE) operates in markets possessing attractive long-term growth prospects. The industrial and commercial expansion can result in increased energy consumption and infrastructure needs. Also, the transition towards electrification in numerous sectors, such as transportation, can fuel higher demand for Sempra (NYSE:SRE)’s electric utility services.
ClearBridge Investments, an investment management company, released its Q2 2024 investor letter. Here is what the fund said:
“Utilities rose largely on merchant power companies serving the data centers powering AI; the rest of the sector, along with real estate, suffered as rate cut expectations were pushed out. One exception was our holding Sempra (NYSE:SRE) — a well-managed and diversified utility holding company. Sempra possesses large franchises in Texas and California, as well as a large LNG business. Sempra is a leading player in each of its markets and all its segments enjoy robust growth outlooks, which should drive high-single-digit growth for the company overall.”
14. Xcel Energy Inc. (NASDAQ:XEL)
Number of Hedge Fund Holders: 37
Xcel Energy Inc. (NASDAQ:XEL) is engaged in the generation, purchasing, transmission, distribution, and sale of electricity. Ross Fowler, an analyst from Bank of America Securities, maintained a “Buy” rating on the company’s stock, and the associated price target was $77.00. The rating was backed by a combination of factors that demonstrate its growth potential despite some short-term challenges. Xcel Energy Inc. (NASDAQ:XEL) has reaffirmed its annual EPS and growth guidance, demonstrating confidence in its financial outlook, says the analyst. Furthermore, the company’s revenue growth, fueled by favorable rate case outcomes and fuel cost recovery, was mitigated by increased operational costs. However, the company has reaffirmed its 2025 ongoing EPS guidance of $3.75 – $3.85.
Xcel Energy Inc. (NASDAQ:XEL) continues to build new generation, invest in system resilience, and has been leading the energy transition. The company reached a milestone in February, when Minnesota regulators approved a resource plan that includes ~5,000 megawatts of new wind, solar, battery storage, and gas by 2030. The company’s capital plan can significantly boost its long-term growth prospects. This can support infrastructure improvements, grid modernization, and expansion into new technologies or markets. The investments can enhance Xcel Energy Inc. (NASDAQ:XEL)’s operational efficiency, improve service reliability, and potentially result in new revenue streams.
13. Monster Beverage Corporation (NASDAQ:MNST)
Number of Hedge Fund Holders: 52
Monster Beverage Corporation (NASDAQ:MNST) is engaged in the development, marketing, sale, and distribution of energy drink beverages and concentrates. Analyst Filippo Falorni from Citi maintained a “Buy” rating on the company’s stock, keeping the price target at $64.00. The rating is backed by a combination of factors demonstrating its healthy market position and growth potential. The analyst believes that competition in the US energy drink market is not a new challenge for Monster Beverage Corporation (NASDAQ:MNST). The company has managed to maintain a consistent market share, highlighting resilience in the face of new entrants, says Falorni. Additionally, the analyst has highlighted the significant growth opportunities in the international market.
The company’s international business remains a critical growth driver, and continued expansion in global markets offers a strong opportunity for long-term value creation. Moreover, international expansion offers diversification benefits, reducing Monster Beverage Corporation (NASDAQ:MNST)’s dependency on the US market. The geographic diversification is expected to help offset regional economic fluctuations and result in stable overall growth. With Monster Beverage Corporation (NASDAQ:MNST) adapting its products and marketing strategies to local tastes and preferences, it can result in new revenue streams and market segments.
ClearBridge Investments, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:
“Drilling further down, we have been engaging with management teams of portfolio companies with production outside the U.S. to understand supply change fungibility and the ability to pass through costs to end customers. We are specifically monitoring risks to the consumer sector from tariffs because consumers have already borne the burden of several years of cost inflation pressuring wallets and some areas of spending, like dining outside the home, have easy substitutes. That said, beverage holdings Starbucks and Monster Beverage Corporation (NASDAQ:MNST) both held up well during the quarter. Starbucks is undergoing an earnings reset under new CEO Brian Nicoll that is being well received by investors. Monster, meanwhile, benefited from price increases and strength in its international business.”
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