Some industries and companies are heavily dependent on economic cycles. Other trends are far more recession-resistant. Investors looking to profit now can stay on the defensive by investing in companies that can maintain their standing during an economic downturn.
Most investors focus on areas like utilities, telecoms, and consumer goods to profit from the stock market. But there are other places as well where investors can likely see excellent long-term returns investing now.
One recession-resistant area with growing spending is in pet products. Analysts have noted that spending in the space has remained strong, even amid the latest economic concerns. That bodes well for companies in the space, with online retailer Chewy (CHWY) looking like a strong rebound candidate here.
The stock is down about 54 percent in the past year, and is down nearly two-thirds off its all-time highs. That’s even as revenue has continued to grow, even if the company has yet to hit profitability.
Action to take: The company’s valuation has gone from over $34 billion to under $14 billion recently, a discount to the value of the company, which continues to build out a niche in online sales and playing to growing spending on pets. That makes it look like a strong rebound play for any market. Traders should look to accumulate shares over the next few months.
For traders, the January 2023 $50 calls, last going for about $4.90, can likely deliver mid-to-high double-digit returns in the coming months on a move higher in shares.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.