How to Make Money in a Recession: 1 Growth Star to Buy and Hold

A stock price chart showing growth over time

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Global recessions can be pretty scary, especially for those who weren’t invested during the 2000 dot-com bust or the 2008 stock market crash. Indeed, haunting memories are returning among the many investors who witnessed the carnage more than 14 years ago. Although the benchmark for many will always be 2008, I would argue that bear markets need not result in a terrible 55-60% plunge from peak to trough. They can, but on average they are less likely, especially given that central banks will seek to balance economic pain with inflationary pressures.

How much force it will take to break inflation’s back remains to be seen. At the moment, the markets believe that there could be interest rates between 4% and 5%. In fact, stocks have already been sold off in line with the economic damage such a rate shock could cause.

The Fed’s fight against inflation is sending shockwaves through markets

The real question is whether the Federal Reserve will be willing to ease monetary policy once it finally does its job of bringing inflation down. While Fed Chair Jerome Powell may shy away from cutting rates at times like this (he probably shouldn’t anyway), it’s important to remember that rate hikes could follow rate hikes in a worst-case scenario of changing market stability the worst.

At the end of the day, the drug of rate hikes shouldn’t prove any more harmful than the disease (inflation) it’s trying to cure. Though the Fed has made mistakes in the past, it is more than capable of learning and adjusting to minimize consumer and worker pain.

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In this article, we take a look at two intriguing gems of growth that can hold their own even as interest rates rise. In fact, the two growth stocks in this article aren’t the unprofitable tech companies that rocketed to the moon in 2021. Rather, they’re less exciting companies with reliable cash flows and prospects for real earnings growth.

Couche Tard Stock: Convenience Could Be Key to Beating Markets

Consider shares of Nutrition Couche Tard (TSX:ATD), a convenience retailer I’m tempted to add more shares to given its recent 10% plunge.

Sure, a 10% drop isn’t nearly as bad as the S&P 500’s flop (nearly 25% down from the peak). However, I would argue that the consumer staples market has what it takes to weather a downturn with minimal damage. Also, I believe that the strong managers are worth the price of admission.

Couche stock is cheap, having smashed the TSX index at 15.19 times trailing price to earnings this year, well below the industry average. While a recession could cause many to spend less, the food nature of Couche’s offerings should help him dodge and weather hard blows.

In addition, fuel prices are falling sharply. That means more people on the move and more opportunities for high-margin merchandise sales. In fact, lower fuel prices don’t necessarily mean lower fuel margins. If anything, the much lower fuel costs are a boon to Couche’s business as it seeks to expand its presence on the global stage.

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