7 stocks to buy that can skyrocket in good times or bad

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Many commentators, analysts and economists are convinced that the US will enter a recession next year. Given the strength of the labor market and corporate balance sheets, along with onshoring phenomenon and the many jobs created by the energy transition, I doubt a recession is on the way. But I can certainly understand investors’ desire to find recession-proof stocks to buy.

Such equity can take a few different forms. Pharmaceutical stocks depend primarily on governments and health insurers for their revenue, neither of which have been hit hard by the recession. As a result, shares of successful drugmakers can soar in good times and bad.

Then there are companies that become more popular with some consumers during a recession. Fast food companies and deep discount retailers, also known as trade-down stocks, fall into this category.

Finally, there are companies that sell products that most consumers, businesses and governments will find necessary even during a recession, such as electricity and cyber security.

Here are seven stocks to buy regardless of where the economy is headed.

LLY Eli Lilly $311.32
MCD McDonald’s $247.91
GSK GlaxoSmithKline $30.02
DLTR Dollar tree $139.33
DG Dollar General $240.25
LNG Energy of Cheniere $166.29
FTNT Fortinet $48.74

Eli Lilly (LLY)

Source: Jonathan Weiss / Shutterstock.com

The wider market may be in a bearish grip, but the pharmaceutical giant Eli Lilly (NYSE:LLY) is not. Shares are up 34% over the past year. The company has many successful drugs for diseases such as diabetes, psoriasis and breast cancer. But perhaps the most promising is the company’s potential anti-obesity drug.

Tirzepatid, marketed as Mounjaro, was approved The Food and Drug Administration approved the diabetes treatment in May after clinical data showed it lowered blood sugar levels and led to weight loss. The market for diabetes treatments is large, but the market for successful weight loss treatments can be astronomical. Eli Lily is currently conducting studies on Mounjaro for weight loss.

UBS analyst Colin Bristow upgraded LLY shares to “buy” from “neutral” based on Mounjar’s potential. per Barron’s:

Bristow’s thesis is simple: treating 1.6 million Americans annually would mean $20 billion in US sales. And that’s still less than 2% of the estimated obese population in the U.S., he said. Use is likely to be higher in part because the drug has strong trial results and a competitive advantage, he said, noting that management on the earnings call said demand was strong.

Eli Lilly may have one of the most profitable drugs of all time on its hands. I don’t expect the stock to have trouble performing further.

McDonald’s (MCD)

McDonald's restaurant in Thailand.

Source: Tama2u / Shutterstock

A few weeks ago, I identified McDonald’s (NYSE:MCD) as a stock that will benefit from the “trade-down” phenomenon during a recession. MCD “is a good defensive stock because many working- and middle-class families will start eating there instead of more expensive restaurants if the economy turns south,” I wrote.

I am by far the only optimist in the fast food chain.

August 26 CNBC Jim Cramer said he sees stocks reached the $300 level, which is about 20% above the current share price. And he’s not even the most optimistic of the bunch. Tigress Financial Partners analyst Ivan Feinseth recently raised its target price to $320, an increase of almost 30%. per A whimFeinseth said McDonald’s is “reinvesting its cash flow into new growth initiatives and increasing shareholder returns through continued dividend increases and share buybacks.”

I strangely remember that in the 1990s and early 20s, many Gen Xers and Gen Yers I knew refused to eat McDonald’s food. But since about 2009, I’ve noticed that the company’s offerings have been embraced by more people in those generations, and the chain is popular with millennials. When I go to McDonald’s restaurants, it’s often quite crowded.

Also worth noting is McDonald’s global comparable sales in the second quarter jumped 9.7% year after year.

MCD shares are up 3% over the past year, compared to the company’s 13% loss S&P 500. I believe stocks will continue to perform well in both good and bad economic times.

GSK (GSK)

GlaxoSmithKline (GSK) office in London.

Source: Willy Barton / Shutterstock.com

GSK (NYSE:GSK), formerly GlaxoSmithKline, has more than 100 approved products in more than 80 markets, in total for promising gas pipeline with more than 60 drugs and vaccines in development.

GSK has had great success with its successful Shingrix shingles vaccine, which provides more than eight years of protection against the virus, according to the company. Speech at a a recent industry conference, Roger Connor, president of GSK Vaccines, said 33 million Americans have received at least one dose of the Shingrix vaccine. But with 120 million people over the age of 50 in the U.S. who are recommended to get the vaccine, Connor says the company is “still scratching the surface” of the available U.S. market. GSK, meanwhile, distributes Shingrix in 24 countries. and plans to increase that number to 35 by 2024, Connor says.

In the field of oncology, GSK has two very promising drugs. The first is Zejula for ovarian cancer. Earlier this month, GSK published positive results from a phase 3 trial. The company said it “maintained a clinically meaningful reduction in the risk of progression or death of 48% compared with placebo” after a median time of 3.5 years among patients with HRD biomarkers.

Another drug is Dostarlimab, sold under the brand name Jemperli, which was approved for the treatment of recurrent or advanced solid tumors with mismatch repair deficiency. These are most often associated with endometrial, colorectal and other gastrointestinal cancers.

Like I wrote recentlya small study found that 100% of 12 rectal cancer patients who completed dostarlimab went into remission. This success rate is extremely unusual for a cancer drug. Obviously, larger studies are needed, but the potential for a highly effective cancer treatment is a good reason for investors to keep an eye on GSK stock.

Dollar Tree (DLTR)

store in front of Dollar Tree location with green signs

Source: shutterstock.com/Jonathan Weiss

Operators of so-called “dollar stores” always attract a lot of attention when the economy is struggling for obvious reasons. There are actually two stocks on today’s list of stocks to buy, the first is Dollar tree (NASDAQ:DLTR).

Shares are up 62% over the past year despite a sharp selloff in the past month following the company’s report second quarter results. Revenue rose nearly 7% year-over-year to $6.8 billion, while same-store sales rose 7.5%. And earnings of $1.60 per share beat analysts’ estimates by a penny. However, management lowered its guidance for the full year, citing a focus on offering more competitive prices at its Family Dollar stores.

Despite the dimmed outlook, Dollar Tree felt the love from analysts. September 6 JPMorgan’s Matej Boss reiterated his assessment of “too difficult”. and raised his price target on the stock from $171 to $176. Boss noted that the stock looks undervalued based on its historical forward price-to-earnings ratio.

meanwhile, A truist analyst Scot Ciccarelli said the post-earnings selloff looks overdone. And despite lowering his price target to $168 from $178, he recommended investors be “aggressive buyers” of DLTR stock.

Dollar General (DG)

Dollar General (DG) storefront with yellow store sign, noon

Source: Jonathan Weiss / Shutterstock.com

Dollar General (NYSE:DG) CEO Todd Vasos covers earlier this month when he said more of the retailers were higher-earning individuals making between $75,000 and $100,000 a year. These middle-income and more affluent buyers are feeling the pinch of inflation in their household budgets and are looking to cut costs.

Wall Street analysts have been beating the drums on DG stock. Citing solid Q1 and Q2 results, Deutsche Bank analyst Krisztina Katai called “one of the few stable retailers in a lousy retail backdrop.”

meanwhile, Morgan Stanley analyst Simeon Gutman called DG his “preferred stock in the Dollar Store space” and raised its target price to $270 from $250. The new target represents 12% growth from current levels. per A whim: “A 10.5% growth in earnings per share is expected[s] Dollar General is benefiting from the macro backdrop, including trading declines, while the execution of initiatives and tight margin controls reinforce what he sees as safety, Gutman tells investors.”

Shares of Dollar General have risen much less than Dollar Tree over the past year, at around 9%. But this lackluster performance could mean stocks have more room to run. They certainly look undervalued, trading at just 1.6 times sales.

Cheniere Energy (LNG)

Aerial photo of an LNG (liquefied natural gas) tanker moored at the small industrial island of Revithoussa equipped with LNG storage tanks, Salamis, Greece.

Source: Aerial-motion / Shutterstock.com

Energy of Cheniere (NYSE:LNG) is the largest exporter of liquefied natural gas in the United States. As I wrote in previous column, is in an extremely good position to take advantage of skyrocketing natural gas prices in Europe. Although the Eurozone is almost certain going into recessionenergy demand is unlikely to be affected much and could increase greatly as the region works to transition to electric vehicles.

The company recently said it expects to generate good forecasts for investors as well more than $20 billion in available cash by 2026 and distributable cash flow of more than $20 per share based on current exchange rates.

Cheniere continues to add new infrastructure that will allow it to export much more LNG over the long term. Despite strong positive catalysts and a 90% increase in LNG inventories over the past 12 months, the stock has a P/E ratio of just 10.8.

Fortinet (FTNT)

Fortinet logo on the wall

Source: Sundry Photography / Shutterstock.com

Given the huge legal bills and negative publicity that large-scale cyber security attacks bring, it is unlikely that most companies will cut their cyber security budgets much, if at all, during the recession. Uber (NYSE:UBER) was the last large company to be hacked. Meanwhile, governments, which, as I mentioned earlier, are largely immune to recessions, are also spending a lot of money on cyber security.

It does that Fortinet (NASDAQ:FTNT) is a good stock to buy for investors looking for names that can thrive during economic downturns.

September 17 MKM partners analyst Catharine Trebnick started coverage shares of FTNT with a “Buy” rating and a $70 price target. This is 44% above the current share price. Trebnick notes that Fortinet has a number of competitive advantages, including the ability to monitor network traffic across multiple devices. It predicts that its billings could reach $10 billion by 2025.

Although FTNT shares have fallen 19% over the past year, it is unlikely that the stock will remain in a downtrend for much longer.

As of the date of publication, Larry Ramer did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer and are the subject of InvestorPlace.com Publishing Guidelines.

Larry Ramer spent 15 years researching and writing articles about US stocks. He was employed by The Fly and Israel’s largest business newspaper Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful contrarian picks were GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.

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