Investing During Uncertainty: Stocks That Thrive in Recessionary Times

The economic landscape has certainly been tumultuous lately. President Trump’s tariffs and ongoing trade wars have reverberated through the market, raising concerns about a potential recession. Consumers are tightening their belts, and this frugality could shape investment trends moving forward. As traders, it’s essential to arm ourselves with strategies that can weather economic storms. What better way to navigate this uncertainty than to look at stocks that performed well during the last significant downturn—the Great Recession—which spanned from December 2007 to June 2009?

During that period, the S&P 500 plummeted by a staggering 36%. Yet, some companies not only survived but thrived. Let’s dive into three standout stocks that shined bright amid the dark clouds of recession: Netflix, Ross Stores, and Vertex Pharmaceuticals.

Netflix: A Lesson in Resilience

Back in 2007, Netflix (NASDAQ: NFLX) was a small fish in the entertainment pond. However, during the Great Recession, Netflix grew remarkably—up 77%! This was an era when streaming was just an inkling of the revolution that was to come, while DVD rentals were still the backbone of its operations. As consumers found themselves cutting back on costly entertainment like cable subscriptions and movie outings, Netflix’s affordable streaming service quickly became a popular choice for budget-conscious viewers.

Fast forward to today, Netflix remains a viable investment even amidst inflation and economic pressure. With subscription tiers that start as low as $7.99, the platform offers tremendous value. However, watch out for Netflix’s price-to-earnings ratio, which currently sits at a steep 48. This high number could leave the stock vulnerable should market sentiment shift negatively. Nevertheless, Netflix provides a unique entertainment solution for consumers, especially when traditional alternatives become burdensome.

Ross Stores: A Budget Retailer with Staying Power

Ross Stores (NASDAQ: ROST) serves as another great testament to resilience. During the Great Recession, the off-price retailer’s stock surged 51%. As consumers sought thriftier shopping options, Ross benefited significantly from acquiring excess inventory from other retailers. The result? Brand-name products at discounts that kept shoppers coming back for more—a trend that continues today.

While Ross has set a cautious outlook for fiscal 2025, projecting same-store sales growth of merely 1% to 2%, its focus on value-driven merchandise places it in a strong position to navigate economic difficulties. The stock’s current valuation is attractive as well, trading at under 20 times trailing earnings, especially compared to the S&P 500’s average of 23 times. If economic conditions soften, you can bet that Ross will be among the retailers that consumers flock to.

Vertex Pharmaceuticals: A Gem in Biotech

Last but certainly not least is Vertex Pharmaceuticals (NASDAQ: VRTX). Although its stock grew just 18% during the Great Recession, today, Vertex stands as a powerhouse, generating billions through its cystic fibrosis treatments, chiefly the triple-drug therapy, Trikafta/Kaftrio. The company reported revenues exceeding $11 billion in 2024, a staggering increase from just $199 million in 2007.

Vertex’s profitability is another reason to keep it on your radar. With an operating profit of $4.4 billion last year, the company boasts an impressive 40% profit margin. Coupled with a promising R&D pipeline focused on type 1 diabetes and kidney disease, Vertex could very well continue its growth trajectory, regardless of economic fluctuations. Currently trading at nearly 30 times next year’s estimated earnings, Vertex is a strategic option for investors looking for a resilient growth stock.

Conclusion: Stay Ahead of the Trends

As traders, it’s crucial to identify stocks that have both historical resilience and potential for future growth, especially in uncertain times. Netflix, Ross Stores, and Vertex Pharmaceuticals each have the fundamentals to not only weather economic downturns but to come out stronger on the other side. These companies offer unique propositions that could ensure they not only survive but thrive in potentially challenging economic landscapes.

Keep these trends top of mind and leverage this knowledge to make informed trades moving forward. Remember, staying ahead of the curve is key in this game, and identifying the right stocks can be the difference between loss and profit when the economy takes a turn.

Happy trading, and let’s stay on trend!