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9 Recession-Proof Stocks

By Joe Magyer – Updated Nov 11, 2016 at 6:14PM

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How to play defense during the economic downturn.

The stock market? Hurting. Home values? Plunging. Consumer confidence? At a 16-year low. Oil prices? You don't even want to know.

Clearly, the world is going to hell in a hand basket, right?

"You must chill"
As my pal Rich Smith is fond of saying. You're hurtin', and we hear ya. This past year has been a tough, tough year for small investors. I'd like to tell you there's a magic cure-all for market volatility -- but there isn't. If you bow out of the market now and move your money into bonds or cash, you're leaving long-run returns on the cutting board. If you get greedy and force the issue by chasing after searing-hot stocks such as First Solar (NASDAQ:FSLR) and Suntech Power (NYSE:STP), you're likely to get burned.

So what is an investor to do?

Think big
And I don't mean that in some highfalutin philosophical sense or some business-school mumbo jumbo. I mean big brands. Big moats. Big dividends.

I'll be frank: Right now is a terrible time to let yourself get psyched out of the market, particularly out of high-quality businesses. Short-sighted, panicky investors are practically tripping all over themselves to sell shares of outstanding businesses: names like Paychex (NASDAQ:PAYX), UPS (NYSE:UPS), and American Express (NYSE:AXP). They are selling. You should be buying.

Nine recession-proof stocks
Robust empirical research has shown that investing in large, slow-growing dividend payers is a market-beating strategy in the long run. So if you're able to invest in large caps that fit that bill and offer downside protection with their fat cash flows and brand prowess during times of recession -- names like Coca-Cola (NYSE:KO) and Procter & Gamble (NYSE:PG) -- well, why wouldn't you do that? As master investor Phillip Fisher once said, "Conservative investors sleep well."

So in the spirit of helping you down the road toward profits and peaceful sleep, we Fools are serving up nine of our current top defensive stock ideas, most of which sport rest-easy balance sheets and hearty-sized dividends. Then head on over to CAPS, and let us know which ones will outperform the market.

So relax, dig in, enjoy, and Fool on!

Our nine stalwart stocks:

None

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Stocks Mentioned

American Express Company Stock Quote
American Express Company
AXP
$137.45 (-2.00%) $-2.81
The Coca-Cola Company Stock Quote
The Coca-Cola Company
KO
$57.87 (-1.25%) $0.73
United Parcel Service, Inc. Stock Quote
United Parcel Service, Inc.
UPS
$161.75 (-1.57%) $-2.58
First Solar, Inc. Stock Quote
First Solar, Inc.
FSLR
$128.21 (-1.26%) $-1.64
The Procter & Gamble Company Stock Quote
The Procter & Gamble Company
PG
$135.71 (0.10%) $0.13
Paychex, Inc. Stock Quote
Paychex, Inc.
PAYX
$114.04 (-0.85%) $0.98

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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