Savvy investors should listen up and start buying a trio of select stocks, just in case Donald Trump’s prediction of a huge recession comes true.
“These, of course, aren't just companies that would do well in Donald's theoretical horrible tomorrow, but ones that would be worth owning during any economic downturn,”
the Fool notes.
A team of experts at The Fool suggests:
- American Water Works. "As the world's largest publicly traded water company, serving 15 million customers in 47 states, it makes sense for demand to remain relatively stable regardless of economic activity. With this in mind, investors should look into American Water Works in the event of a recession," the Fool said.
- Big Lots: "In general, discount chains do well in an economic downturn, but Big Lots is especially well positioned to thrive during a recession," the Fool explained. Big Lots sells bigger-ticket items at heavy discounts. The chain can fill the shopping void during a period when people have to watch every dollar.
- Church & Dwight: Companies that deal in consumer essentials can buffer portfolios from the threats of a downturn, and Church & Dwight's wide range of staple products and solid brands make it a pre-recession stock to own. "Church & Dwight also pays a dividend, and income generation is a very desirable characteristic in recession," the Fool pointed out.
Trump predicted a "very massive recession" soon in the United States, saying that "it’s a terrible time right now" to invest in the stock market — though he claimed that he could eliminate the nation's $19 trillion debt "over a period of eight years."
"I think we’re sitting on an economic bubble," he told
The Washington Post in a report published last month. "A financial bubble."
Trump emphasized that this applied to the economy overall and not a specific sector, attributing it to an overvalued stock market.
"First of all, we’re not at 5 percent unemployment," the developer told Post reporters Bob Woodward and Robert Costa. "We’re at a number that’s probably into the twenties, if you look at the real number.
"That was a number that was devised, statistically devised to make politicians — and in particular presidents — look good," Trump added. "And I wouldn’t be getting the kind of massive crowds that I’m getting if the number was a real number."
Meanwhile, Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc. said a Trump presidency wouldn’t be the blow to U.S. business that some fear,
Bloomberg reported.
“If either Donald Trump or Hillary Clinton becomes president, and one of them is very likely to be, I think Berkshire will continue to do fine,” Buffett, 85, said at the company’s annual shareholders meeting Saturday in Omaha, Nebraska.
The outcome of November’s presidential election is unlikely to change the fact that the U.S. is a “remarkably attractive place in which to conduct a business,” said Buffett, who endorsed Democrat Clinton at an Omaha rally in December. U.S. companies have enjoyed “terrific” returns on equity despite a sustained period of ultra-low interest rates, he added.
Trump and Clinton are their parties’ respective front-runners in a campaign that has exposed discontent with Washington insiders, anger over global trade deals, frustration with Wall Street and furor over the growing gap between rich and poor. At the same time, each candidate’s unfavorable rating exceeds 50 percent, a historically high figure at this late stage in the primary season.
Buffett, who has criticized Trump in the past and scorned politicians’ pessimism about the country, looked past the current voter angst for a longer view of U.S. economic prospects.
(Newsmax wire services contributed to this report).
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