Get in touch: 07707 222 873

Do Recession Free Companies Exist? Learn How to find them

Just like an economic boom and high growth levels, recession is also a part of the economic cycle. If they don’t last too long, economic recessions could give an economy a new lease on life. However, recession could spark fear, mass selloffs in the market and a general sense of gloom in the country. Investors are specially affected by it as the value of their portfolios rapidly decline.

Do you think there could be something like a recession proof company? Do you think there could exist a business that is so robust and fundamentally strong that it could survive any recession with comparative ease? Such companies exist and if you look carefully, you will be able to find the needle in the haystack with ease.

Here is how to find a company that could possibly handle recession better than others.

An insulated customer base

While it sounds bad enough already, there is a segment of people who will not be affected by a major economic meltdown, at least not in the same proportions the majority. These companies could be working for the government or for the military. Such companies usually have very long-term contracts with these agencies.

Moreover, military spending and long-term government contracts are always honored, regardless of the current economic conditions. Even if the payments are delayed, there is more or less some kind of surety of payment. Even the richest of the rich will be affected by the economic meltdown but the proportion could vary, depending on their exposure to the recession.

An essential service/product

During the times of recession, people may try to use less electricity to avoid paying a big bill with their decreasing wages. However, they may not give up on electricity completely. Offices, organizations and several public spaces cannot forego electricity. A company like this will likely leave the economic recession unscathed because it deals in essential goods and services.

Such companies do not necessarily get hit hard because of the nature of their offerings. People will never stop consuming food or using electricity and now, maybe not even using their mobile phones. This kind of activities will continue and hence, the company will survive too.

Mandatory services

There is a slight difference between essential goods and services and mandatory services. When something is mandatory, it has to be carried out regardless of the current economic position of the country. It is usually made mandatory by the government of any other authority.

Companies that conduct audits, help in maintenance and repairs of essential public services, help in repairing pipelines for oil and natural gas, help in filing income taxes etc. are immune to recession. In fact, companies that provide sewage treatment plants or waste disposal services will also be continuing throughout recession without being hurt.

Blue-chip stocks or a company that commands great respect in a certain marketplace or niche will also be safe during bad times. Smaller and less advanced or lesser known companies will have wrought away but the best in the industry will survive.

Do you know of a company that could likely fit into this criterion? If yes, buy their stocks and hold.