As an investor, you should have a basic understanding of business cycles and an awareness of how different industries relate to the economy. Non-cyclical or counter-cyclical stocks are those whose prices are not correlated, or only slightly correlated, with the performance of the economy. These are typically industries and companies that offer products and services that are not abandoned even in a crisis. In particular, these include sectors such as consumer staples and utilities, as well as healthcare and insurance. In the event of major market collapses, shares from these sectors are usually not completely spared, but the price declines are often smaller than those of cyclically sensitive shares. In addition, defensive stocks are more likely to survive economic crises due to their business model. In this article, we present a small selection of countercyclical stocks.
Costco Wholesale
- Company: Costco Wholesale Corporation
- Symbol (TWS): COST
- ISIN: US22160K1051
- Stock exchange: Nasdaq
- Country: USA
- Currency: US Dollar
- Market capitalization: USD 214.1 billion
- Sales (TTM) in USD: 203.08 billion
Costco Wholesale is a well-known wholesale chain from the USA and has its headquarters in the state of Washington near Seattle. The company offers everyday items, such as groceries and household items, in 700 stores around the world. Costco also operates pharmacies, opticians, hearing aid centers, tire fitting centers and gas stations. Costco Wholesale has several advantages over other retailers, primarily because its membership model creates a reliable customer base with a retention rate of about 90 %. The company also generates most of its profits from membership fees and can therefore offer rock-bottom prices for its merchandise, giving it a competitive edge.
Fresenius
- Company: Fresenius SE & Co. KGaA
- Symbol (TWS): FRE
- ISIN: DE0005785604
- Stock exchange: XETRA
- Country: Germany
- Currency: Euro
- Market capitalization: EUR 24.63 billion / USD 27.94 billion
- Sales (TTM) in USD: 36.86 billion
Fresenius is a health care group founded in 1912 and headquartered in Bad Homburg, Germany. Fresenius offers products for hospitals as well as for outpatient medical care in Germany and abroad. These include, in particular, equipment for the treatment of kidney failure and dialysis-related services, pharmaceuticals, nutritional products, infusion solutions and much more. Another business segment operates hospitals, outpatient clinics and prevention centers in Germany and Spain. Fresenius' share price has lagged the overall market in recent years. However, the company is one of the most reliable dividend stocks from Germany and has been paying out an annually growing dividend for many years.
Estee Lauder
- Company: The Estée Lauder Companies Inc
- Symbol (TWS): EL
- ISIN: US5184391044
- Stock Exchange: New York Stock Exchange
- Country: USA
- Currency: US Dollar
- Market capitalization: USD 111.41 billion
- Sales (TTM) in USD: 17.05 billion
The cosmetics industry is generally more volatile than other parts of the consumer staples industry. In addition, cosmetics companies have been hit harder by the COVID-19 pandemic than most other consumer goods manufacturers, as demand for make-up and fragrances has declined due to social distancing. Nevertheless, Estee Lauder shares have been among the top performers in recent years and have outperformed the S&P 500. Estee Lauder is the second largest cosmetics company in the world after L'Oreal and has a wide range of high-quality brands, including Clinique, Aveda, La Mer and MAC. The company's recent growth has been driven in large part by its success in the Chinese market, where its skincare products are performing particularly well. The dynamism of the growing middle class in China should continue to support Estee Lauder's growth in the coming years.
Unilever
- Company: Unilever PLC
- Symbol (TWS): ULVR
- ISIN: GB00B10RZP78
- Stock exchange: London Stock Exchange
- Country: Great Britain
- Currency: GBX (Pence Sterling)
- Market capitalization: 90.24 billion GBP
- Sales (TTM) in USD: 122.3 billion
Unilever is a multinational consumer goods company headquartered in London. The company is the largest soap manufacturer in the world, but also produces numerous other products. Its best-known brands include Lipton, Ben & Jerry's, Rexona, Knorr, Magnum and many more. Unilever's share price has been rather disappointing over the last two to three years. However, the underlying business is still on a solid footing.
Diageo
- Company: Diageo plc
- Symbol (TWS): DGE / DEO
- ISIN: GB0002374006 / US25243Q2057
- Stock Exchange: London Stock Exchange / New York Stock Exchange
- Country: Great Britain / USA
- Currency: GBX (Pence Sterling) / US Dollar
- Market capitalization: GBP 86.89 billion / USD 117.16 billion
- Sales (TTM) in USD: USD 12.73 billion
In 2020, production shortfalls hit global spirits group Diageo hard. The company, which stands for spirits brands such as Johnnie Walker Whiskey, Smirnoff Vodka, Captain Morgan Rum and Tanqueray Gin, even went so far as to scale back its full-year forecasts due to the uncertainty. As bars and restaurants slowly reopened, Diageo's business increasingly recovered and the stock returned to its previous highs in 2021 and performed extremely well throughout the year. Whether or not to invest in the alcohol business remains a personal choice; the fact is that alcohol is big business and Diageo is one of the biggest brands in this segment. Given the recent outperformance and sales momentum, there is a good chance that Diageo stock will continue to be one of the industry winners in 2022.