Stocks to Avoid in Recession

advertisement

The Covid – 19 pandemic has brought with it exciting times. The economies of many countries are crushing at a fast pace. As such, the likelihood of a global recession is at its peak. Financial advisors advise most people to be careful when venturing into investments due to the uncertainties presented by Covid – 19 related effects. As a matter of rule, there are certain stocks to avoid during a recession and that which investors must approach with a lot of caution in the present day.

1. Uber

Uber is one of the companies that play a crucial role in the running of the economy but also a company that is prone to fall or stall in the heat of a recession. In Uber’s S-1 filing, they cited an economic downturn in the areas it succeeds as one of the factors that would inauspiciously affect the running of its businesses. It was one of the most hit companies when Covid – 19 first hit the world. A global recession would surely bring this company to its knees and, therefore, a stock that investors must avoid if they aim to preserve their money. 

2. Lyft

Like Uber, Lyft has indicated an economic downturn has a factor that could cripple its business in its S-1 filing. It also noted that a crisis in public health would also cripple its businesses. Therefore, it would be a bad idea to buy stocks of Lyft during a recession.

3. Molson Coors

This company is the owner of Miller, Coors, and other brands. However, the company has been experiencing structural problems for quite some time. The arrival of Covid – 19 heavily affected the company so that it depreciated by 25% within the next few months that followed. A company with such issues is not a company that anyone should invest in during a crisis hitting the entire world economy. Therefore, it is categorized as a top stock to avoid recession. 

4. Apple

Apple stocks are some of the stocks that have done relatively well during the pandemic. However, that is not an indicator of its ability to weather through the storm of a recession. One of the reasons it is a stock to be avoided in a recession is that few people will have the financial capacity to spend on luxurious smartphones and laptops. In addition, the ever-rising trade wars between China and the United States are an indicator that Apple’s stocks are likely to be unstable in the event of a recession.

5. Tesla

Tesla stocks are the other category of assets that investors must avoid during a recession. While Tesla has fabulous products, their prices are way too high to afford in a downturn. It follows that; most of Tesla’s expensive cars would have reduced client inquiries and sales in the heat of a recession, something that would send the stocks of the company crushing. 

As we conclude, here are the other stocks to be wary about during a recession:

Moderna

Ford Motor Company

American Airlines

Navistar International

US Steel Corp.

GoPro

Typically, every investor needs to know geopolitical and economic factors affecting a company before investing in its equities. A looming recession indicates that investors should exercise caution before venturing into any company’s shares.

All rights reserved 2021