These stocks weathered the 2008 and 2020 recessions.
The financial crisis of 2008 wreaked havoc on the stock market. In 2008 alone, the S&P 500 lost 38.5% of its value — the worst year since 1931 — in the depths of the Great Recession. But while the vast majority of equities plummeted in 2008, there were pockets of the market that showed remarkable resilience. A dozen years later, a pandemic would send the U.S. into its next recession, and the following seven stocks all held up in both 2008 and over the tumult of the last year, during which the S&P 500 actually rose 16.2%.
Target Corp. (ticker: TGT)
Target has an impressive track record of beating the wider market in both 2008 and 2020. In fact, Target’s performance over the past year has been far more impressive, as a multiyear strategy of investing heavily in online sales started reaping major rewards. In the first three quarters of 2020, TGT’s comparable sales rose 10.8%, 24.3% and 20.7%, respectively. Those are absolutely blockbuster results, virtually unheard of for a big-box store of Target’s size, and the second-quarter comp growth of more than 24% was the highest in company history. In the third quarter, digital comparable sales surged 155% year over year, accounting for more than half of comparable sales growth.
Outperformance of S&P 500: 47 percentage points (2020-2021); 8.5 percentage points (2008)
Lowe’s Cos. (LOW)
The formula for revenue growth in retail is expanding your store count and increasing comparable sales growth. Although comparable sales declined 7.2% in fiscal 2008, home improvement retailer Lowe’s was investing in growing its store base, which allowed it to only see revenue decline by 0.1%. In 2020, Lowe’s benefited from a surge in demand for do-it-yourself home repairs as millions transitioned to staying in or working from home. Revenue rose 23.5% in the first nine months of fiscal 2020, as online sales boomed; last quarter, Lowes.com sales surged 106%.
Outperformance of S&P 500: 25.5 percentage points (2020-2021); 35.2 percentage points (2008)
A solid blue-chip stock, Nike’s outperformance during two notable recessions isn’t as intuitive as other recession-proof stocks on this list. But the numbers don’t lie, and Nike’s elite brand has served it well. In fiscal 2009 — which was one of the worst 12-month periods in U.S. economic history and ended May 31, 2009 — Nike revenue actually grew 2.9%, and the sports apparel and shoe giant boosted its dividend by 12%. By 2020, Nike’s strong brand had combined with a focus on e-commerce, and Nike’s two most recent earnings reports showed explosive growth in Nike Brand digital sales of 82% and 84%, respectively.
Outperformance of S&P 500: 23.7 percentage points (2020-2021); 19.1 percentage points (2008);
NextEra Energy (NEE)
One sector that tends to outperform in tough times is the utilities sector, which has stable demand for its products, high barriers to entry, regulated price hikes and predictable cash flows. NextEra Energy specifically is the single most valuable publicly traded utility stock, with a market capitalization of about $160 billion. A champion of clean energy, NEE is known for its focus on alternative energy sources like wind and solar, and in 2020 the company doubled the amount of renewable energy megawatts commissioned from 2019. The company continues to invest heavily in renewables, which it sees as an increasingly important part of its business in the 2020s.
Outperformance of S&P 500: 8.3 percentage points (2020-2021); 15.1 percentage points (2008);
Walmart was a clear beneficiary of the dramatically weakened economy during the Great Recession, as shoppers rushed to minimize expenses by shopping at discount retailers. Walmart’s revenue grew 7.2% in 2008, the single worst year for the economy in generations, which is a testament to its resilience. The big-box retailer even managed to grow earnings per share and increase its dividend by 8% that year. Since then, Walmart has built out its grocery business, piled into e-commerce, and during the pandemic its investments in the digital side, as well as curbside pickup, helped insulate WMT stock from the brunt of the pandemic.
Outperformance of S&P 500: 3.8 percentage points (2020-2021); 58.5 percentage points (2008)
Dollar Tree (DLTR)
Think a chain of variety stores in which every item costs $1 or less might resonate with cash-strapped consumers? Dollar Tree is such a chain, and its decision to branch out from party favors and into basic household consumables like cleaning supplies and groceries looked brilliant in 2008. CEO Bob Sasser called it a “key to our relevance in both good times and bad,” and he was right. Doubling the number of stores that accepted food stamps was also wise, helping DLTR outperform the market by nearly 100 percentage points that year. Fast-forward to 2020, and Dollar Tree owns Family Dollar as well, a combination that has insulated it from experiencing all the volatility the wider market has seen.
Outperformance of S&P 500: 3.5 percentage points (2020-2021); 99.3 percentage points (2008)
Home Depot (HD)
About 50% larger by sales than its rival Lowe’s, Home Depot dramatically outperformed the market during the worst year of the Great Recession, despite sales declining by 7.8% in fiscal 2008. At that time, Home Depot was exiting noncore businesses and building up its rewards program, dubbed Home Depot Pro. Today, the company pays about a 2.2% dividend, and it has also benefited from the surge in demand for home repairs in 2020, with comparable sales rising 6.4%, 23.4% and 24.1% over the last three quarters.
Outperformance of S&P 500: 0.9 percentage point (2020-2021); 27.1 percentage points (2008)
Stocks that weathered the 2008 and 2020 recessions:
— Target Corp. (TGT)
— Lowe’s Cos. (LOW)
— Nike (NKE)
— NextEra Energy (NEE)
— Walmart (WMT)
— Dollar Tree (DLTR)
— Home Depot (HD)
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Update 02/09/21: This story was published at an earlier date and has been updated with new information.