Get copies of all checks. Beer, wine, and distilled beverages are high-margin products that are in demand. We hear about this so much because it breeds fear; recessions can be catastrophic for businesses and consumers. Perhaps the most prominent of these is consumer staples. Going to college for four years is not the only career option in front of you. Are you insured for a ransomware attack? I wrote this article myself, and it expresses my own opinions. No one can guarantee an industry won't tank during a financial crisis, but the grocery and consumer goods industry usually holds up well in times of crisis. . Further, the company's roofing business showed resiliency in the previous downturn and provides a steady stream of earnings and cash flow. Will the fact that mortgage rates are going up force more people to make due with an older house that may have a roof problem? Some industries turn out to be recession-proof only for a short time, perhaps linked to the reason the downturn occurred. These three outperformers were popular with investors not necessarily because of their defensive characteristics but rather because they stood to benefit from the global lockdown inflicted by the COVID-19 virus. Hiring? In one way, Owens Corning and Beacon Roofing Supply may actually be beneficiaries of an economic slowdown. Bond ratings from Moody's. Short-term pain is inevitable and determining the strength of the balance sheet is incredibly important in times like these. We also reference original research from other reputable publishers where appropriate. Dont try to be everything to everybody. Many Roofing techs ultimately choose to start their own roofing company. While the guide can be useful, its important to remember that no recession or company in the same industry is exactly the same, and the past cannot predict the future. When you look at consumer goods conglomerates, say a Proctor & Gamble or Unilever, their portfolio is stacked with household staples and brands that cater to various tiers of budgets. But as modern business nay, modern life relies ever-more on technology, these stocks have become all but essential. COVID-19 had affected roofing businesses. We also reference original research from other reputable publishers where appropriate. Owens Corning (OC) and Beacon Roofing Supply (BECN) have dropped by 39% and 58% respectively, and are now trading at levels not seen since 2012. The US economy has not had a 10% quarterly contraction since the 1950s. When these businesses crash or the rest of the economy booms you risk suffering losses or missing gains. I am not receiving compensation for it (other than from Seeking Alpha). Phone: Stormseal Named in Fast Companys Annual List of the Worlds Most Innovative Companies for 2020, Stormseal Joins Contractor Connection Member Advantage Program, Stormseal a Finalist in Worlds Top Urban Resiliency Innovations, Bringing Stormseal Protection to the Heart of Hawaii, Stormseal Stands Up to Recent Louisiana Storms and Tornadoes, Roofing Contractors Shrink-Wrap Damaged Homes After Hurricane Ida. You can learn more about the standards we follow in producing accurate, unbiased content in our. What can also be said is that any roof needing to be done during this time will still need to be done next year, regardless of the state of the economy. Join a recession proof industry! That includes telecommunication companies like Verizon, search engines like Google, social media firms like Meta and streaming services like Netflix. Businesses like discount retailers or firms that provide maintenance and repairs to extend an items lifespan fit this niche. We can see that Owens Corning is in great shape sitting well below the industry benchmark of 0.6x debt leverage. For example, the Republic of Irelands Ryanair has a fleet of 419 airplanes, of which all but one are the Boeing 737-800. When a recession or an economic slowdown occurs, markets become volatile, leading investors to sell stocks. Growth has raised the amount of material many individual contractors buy each year; have you asked for annual pricing based on your volume? As previously mentioned, Procter & Gamble and Unilever are also major players in the beauty industry. That said, healthcare is a sector generally renowned for faring better during downturns. Historically, IT has maintained a more cyclical than defensive position. It seems counterintuitive to think that there could be a shortage of potential employees in such a down market. Making wealth creation easy, accessible and transparent. Since we will only know what industries weathered this recession best when it's over, we looked back to the last recession for some guidance. The industry employs about 25,000 people in the . Research the insurance process in the states where you conduct business. The coronavirus pandemic has pushed the United States into a recession according to the National Economic Research Center, an organization that monitors the economy. government. It will shrink overall, as people will not spend until they absolutely have too. U.K.-based Diageo controls brands includingSmirnoff, Johnnie Walker, and Tanqueray. Major companies in this sector include Colgate-Palmolive Company (CL), Proctor & Gamble Co (PG), and Unilever N.V. (UN). No recession is exactly the same. Each one can be caused by different factors and vary in nature. Other contractors have stopped having material review meetings to order supplies in the advance because they feel they are too busy. These industries can also profit from government regulation and subsidies during recessions, providing an extra layer of protection. If you are at that point in your life where you have to make a strong call on the direction of your career, then you cannot ignore the possibility of a career in the roofing industry. Data center REITs like Digital Realty and telecommunication tower REITs such as SBA Communications tapped into business trends of early 2020, including homeworking and the accelerated rollout of 5G technology. This industry tends to perform well during recessions because theyre required for clean, healthy living. Quantum Roofing is currently looking to add four full-time individuals to our team . A sector fund is a fund that invests solely in businesses that operate in a particular industry or sector of the economy. Industry Predictions 2023 [Survey Data]. I believe the roofing industry should be considered essential, alongside other recession proof industries. Nothing brings money to the forefront of people's minds like a recession. Companies that make basic necessities like consumer staples and food will always have demand, even during an economic downturn - as people need to prepare meals, wash, clean, and so on. Hardly any premium can be distinguished despite the niche industries strength. Fast completion of skills If you take the college route, it will take a minimum of three to four years for you to complete your degree. Healthcare is one of the most commonly cited recession-proof industries. The thinking goes that people will always get sick, and rarely will they avoid necessary treatment. Investopedia does not include all offers available in the marketplace. In most nations, a recession is officially declared when economic growth is negative for two consecutive quarters. Short termist goal setting from public investors, seeking higher earnings from investing in cyclical companies. By closing this message or continuing to use our site, you agree to the use of cookies. Similar to IT, communication is less essential for life and more for evolving business needs. In addition, keep in mind what businesses people may patronize more if their income decreases. The only problem is that there isn't much of a discount to be had among most grocery store, food manufacturer, and utility stocks. Performance of Company Types During the Great Recession (2008-09), Below are some examples of Industries that have Recession-proof tendencies. An adult man and woman require 2,500 and 2,000 calories respectively, per day, to maintain their weight. Please. When you look at demographic, travel, dietary, environmental attitudes, and personal health trends over the past decades, its feasible to opine that new recession-proof industries will emerge as entrepreneurs capitalize upon their prospects. You must have JavaScript enabled to enjoy a limited number of articles over the next 30 days. If you keep a stocked liquor cabinet at home, you're most likely a customer of these companies. Historically, this sector was always considered to be cyclical. Fast completion of skills The offers that appear in this table are from partnerships from which Investopedia receives compensation. The idea is that a leaky roof can't be put off indefinitely. Visit our updated, This website requires certain cookies to work and uses other cookies to help you have the best experience. Despite record number of people seeking employment, certain industries are struggling now more than ever before to find labor. While for the younger readers this qualifies me for being an old goat, the reality is Ive seen and endured quite a few economic downturns. Colgate-Palmolive. A high level of debt leaves little room to maneuver and reposition when times get tough. Frequently, the stock market is an early warning of a decline and it has taken a hit the last few months. Normally, you'd assume that telecom companies will be less sensitive to market movements and that internet tech companies reliant on advertising dollars could struggle as marketing budgets are cut. After that, we'll break things down by industry. Horizontal integration is the acquisition, merger, or expansion of a business that increases the market share in its existing industry. Have a competent independent agent review your coverage. You simply need water in your pipes, electricity in your house and air in your vents. D/E ratios from Ycharts. A few utilitarian bets could include PG&E, American Electric Power and American Water Works. The sooner you start, the sooner youll be able to generate income. High volume and profits can hide the losers. However, as is the case with recessions, not all companies in the same industry are alike. Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in BECN, OC over the next 72 hours. They had this to say in their report: Moody's believes OC will be able to sustain its investment grade rating in an eventual economic downturn, since its business operations have significantly improved over the years. At least once a year track job costs by type of work, estimator, project manager, foreman, etc. Pay specific attention, not to the product/service, but the behavior around it which establishes its defense.. In 2008 and 2009, sales of standard-priced beverages suffered the most as people impacted by the recession switched to less expensive drinks. Owens Corning and Beacon Roofing Supply. If reps are well trained, can draw those objections out in advance by asking strategic questions, properly position finance options and then leverage that into a strong close, it will make a world of difference., I think it will thin the herd and there will be opportunities for growth.. In reality, recession or not, you should run your business efficiently and be prepared for a slowdown. "If we're defining recession-proof as 'no impact to the industry,' I would say no, cybersecurity is not recession-proof," he tells Fortune. Keep in mind that drinking habits and preferences change in tough times, and not all manufacturers will benefit equally. Those structures will need emergency response and repairs. "Recession resistant" is a more accurate term, and if there was a poster child for the recession-resistant industry, it's consumer staples. Consumer discretionary is an economic sector comprising non-essential products and services that individuals may only purchase when they have excess cash. Food suppliers and grocery stores 3. By agreeing you accept the use of cookies in accordance with our cookie policy. Talk to insurance agents. They each own dozens of major brands that are sold almost everywhere in the world. Be that as it may, I consider myself a realist when it comes to the impact of a global economic shutdown. If you look at the manufacturer of many items in your home, you will find these companies. The problem now is high inflation and rising borrowing costs and this particular economic environment could well see other companies and industries fare better. Structural unemployment is a longer-lasting form of unemployment caused by fundamental shifts in an economy. Is this happening to you frequently? In 2008 the same thing happened to a lesser degree: We can see that the discount of Owens Corning and Beacon Roofing Supply were incredibly short-lived. Faced with a TAM ceiling of population * calories, over the years, food companies have reduced the nutritional content of their food in order to encourage more snacking, to counteract this ceiling. Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics. Have monthly financial meetings. Southwest Airlines has been profitable for 45 years in a row. Have monthly financial meetings each and every month. As inflation marches on and the Federal Reserve hikes interest rates to match, the threat of recession appears ever-likely. Learn here why it happens and the different types of mergers. Forbes reports that in March 2009, 800,000 jobs were eliminated and an estimated 8.6 million jobs were lost in total throughout the two-year period. ", IWSR. The chart below shows a cost breakdown for asphalt roofing and metal from Home Advisor: Cedar shingle and concrete tile were also said to be more expensive options compared to basic asphalt. and Zoom stocks that thrived during the pandemic due to a global shift to work-from-home. "Alcohol Sales Thrive in Hard Times. Since these products are always in demand, they're considered consumer staples. Essential sectors such as healthcare, grocers, and others have been deemed "essential" and must stay open since they provide much-needed services and products to consumers. Stocks that thrived during one recession might struggle during another and not all companies in the same industry share the exact same characteristics, with some being more cyclical than others. Beacon Roofing Supply on the other hand remains highly leveraged sitting at 1.03x debt/equity. It remains a priority and any short term slowdown will result in a booming rebound at a later date.