Putting up and running a business amidst recessionary headwinds can be scary. That’s why growing cash reserves should be your top priority. It helps you sustain and expand your operation even when incurring net losses. One way to do that is by borrowing from financial institutions. But due to high-flying interest rates, reinvesting a part of your capital can be helpful.
The stock market is one of the most popular options for individuals and business owners. However, you may hesitate to enter as the market remains bearish. Even so, many stocks are durable enough to withstand the blows of economic downturns. This article will list some industries to invest in during these volatile times.
Banks
Banks are more vulnerable to risks amidst interest rate hikes. But interest rate hikes can become another growth avenue. With a robust business sector, they can weather the market storms. They may also flourish with their prudent portfolio diversification and handling of loans and deposits.
New York Community Bank (NYCB) is an attractive stock with solid fundamentals. With its acquisition last month, it’s easier for the company to become a national bank. It can fortify its domestic presence and do more business in another state without acquiring banks domiciled there. Also, its stock price is lower than its intrinsic value, so massive gains are possible.
In this episode of the Money Girl podcast, Money Girl‘s Laura Adams reviews the best online bank accounts, so you can see how yours stacks up! Plus, she offers eight tips for staying safe when you’re banking online.
Insurance
The property and casualty insurance or P&C industry is at the forefront of climate finance. It’s quite interesting to look at P&C insurance companies in Florida. However, it can be tricky due to the rampant roofing scams, leading to insurance exodus. It’s also interesting to observe P&C insurance stocks in Illinois and Pennsylvania. The impact of natural disasters is moderate, making the demand and claims stable.
One of the possible candidates is United Insurance Holdings Corp. (UIHC). Unlike the other companies on this list, UIHC is contracting. Yet, it appears justifiable since its revenue streams will be more united as it dissolves its residential segment. It can avert plenty of scams and enhance its commercial segment. The stock price downtrend may become an opportunity to realize gains once the company bounces back.
Likewise, life insurance has become a staple in the last two years. The pandemic has highlighted the importance of having financial protection. Statistics show that the industry still has a long way to go due to low market penetration. Overestimation and shaky income levels are some hindrances. Yet, it opens more room for improvement and expansion.
Many life insurance stocks are viable and sustainable. Their sound fundamentals and impressive dividend yields are the factors to consider. Lincoln National Corporation (LNC) can be an excellent choice.
Listen as Money Girl talks with Melanie Musson from Clearsurance.com about how to use smart home technology to protect your property and save money on home or renters insurance. You’ll learn which insurance companies offer the best tech partnerships and specific devices that cut costs and your potential risk.
Consumer Finance
Including consumer finance on this list is a no-brainer. Credit cards and loans are more of a staple today for various reasons. First, interest rates are already way beyond our expectations. With that, the probability of another recession increases, posing threats to the labor market. No wonder many households are doing more research to seek out credit cards and lending institutions with lower repayment rates.
In this episode of the Money Girl podcast, Laura explains how to use your cards more strategically.
Second, digital transformation is nearing its peak. Mobile wallets and credit cards capture more market share. As more people go online, cashless transactions increase further. Many business experts like doola also advise entrepreneurs to innovate business processes. As a business and an investor, going cashless can drive efficiency and viability.
Investors may choose American Express Company (AXP), an industry staple. It’s already a giant, but its growth potential remains high. Fundamentals are sound with a reasonable stock price. Still, the most optimal choice is OneMain Financial Holdings, Inc. (OMF).
OMF’s Fundamentals are also sound with robust performance. Aside from its prudent portfolio diversification, it’s an ideal alternative for lending institutions. More importantly, it has very high dividend yields of 10-12%, which is about ten times the S&P 400 average. So even if the stock price is approaching its resistance, the stock is still worth the try.
The stock market sees hammered growth in a rugged economy. Risks are more evident, so price downtrends may persist. Yet, you can find many opportunities for enticing gains and dividends. These are durable businesses that will remain unfazed and thrive amidst market changes.