With the Dow still below the psychologically significant 12,000 mark, investors would do well to consider the impact a prolonged recession might have on their portfolios. It might be tempting to move to an all-cash position, but before you make such a hasty move, take the time to look at stocks that have the ability to hold up in tough times.

I used the stock screener at our investor-intelligence database, Motley Fool CAPS, to look for companies that have proven to be less volatile than the market, but which have been reporting strong revenue and earnings growth over the past few years. With a beta less than that of the S&P, these companies ought to react less violently to any market swoon.

By adding in a measure of cheapness -- these stocks also carry a P/E ratio that’s less than average -- we build in an additional margin of safety. However, with CAPS investors rating them at three to five stars, we're getting companies that are expected to outperform. Our data suggests that the highest-rated stocks in the database significantly outperform the lowest-rated ones.

When I ran the screen, it returned 66 stocks. Below, I've listed five that look like they could do well in any extended downturn.


CAPS Rating (out of 5)

3-Year Average Revenue Growth

3-Year Average EPS Growth


P/E Ratio

Central European Distribution (NASDAQ:CEDC)






EnerSys (NYSE:ENS)












Humana (NYSE:HUM)






Oceaneering International (NYSE:OII)






Source: Motley Fool CAPS screener.

A slick move
Although oil producer Hess doesn't grab the headlines the way some oil companies do, CAPS members are enthusiastic about its prospects; 95% of them think it will outperform the market. The company’s profits were up 62% last quarter, it has expanded acreage in the Bakken field, and it’s landed a new contract to supply the Department of Defense with natural gas. Considering all this, CAPS All-Star member reddingrunner sees it as one of the best-run companies in the industry:

Actually I hope oil prices keep dropping for awhile and if they do Hess will drop too. But when they stop dropping (tomorrow? next spring?) Hess will start bouncing. One of the best on the business. I've got this strange idea that demand for oil will continue to soar for the foreseeable future.

Central European Distribution produces a prodigious amount of vodka for Poland -- more than 9 million cases of vodka annually! -- and it has more than 700 different brands of alcohol in its portfolio, making it the leading national distributor in the country by volume. The drinks business has been a bit of a mixed bag lately; Diageo (NYSE:DEO) saw profits rise as growth slowed, while Brown-Forman (NYSE:BF-B) was hurt by charges for its tequila business. With the continued vodka sales growth it has enjoyed, however, CAPS member colonelnelson finds there's opportunity in the price dip Central European has sustained:

A bit of a high flyer, yet it's hard to ignore such good year over year revenue growth and increases in earnings per share. CEDC cycles a bit, and that will lead to some ups and downs, but overall I think investor sentiment is bullish. I'm also pleased that the last time this stock dipped to 70 on June 27th, the institutional buyers went crazy and snapped it up like hotcakes. I'm hoping for a little more of this institutional love at 69.69. Outperform.

Managed-care provider Humana has juggled the competing concerns of rising costs and expanding profits and was able to raise its full-year earnings guidance recently. Top-rated CAPS All-Star member mm20001 thinks shares were hurt more because of sector concerns than company-specific ones, and he views this as a value investor's opportunity:

Humana has half their market cap of $7.5B in net cash ($5.6 B cash-$1.9 B debt), and a 2009 est. P/E of 7.5. The stock is off its Jan 2008 high of $88 to the mid 40s amid weakness in the health care sector. This is a value play with solid upside potential at current levels.

Take a recess
Market downdrafts can wreak havoc on your portfolio, but there's no reason to hide your money in the mattress. These five recession-fighters look to have the goods to keep your portfolio on the upswing, but it pays to start your research on these stocks on Motley Fool CAPS. Use the screener, read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page. Then weigh in with your own thoughts on which stocks you think can keep the dogs of recession at bay.

Diageo is a Motley Fool Income Investor recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.