Corporate CFOs Think a Recession Is Coming. Here Are 3 Stocks to Own If They're Right.

Globe and Mail

04-04-2025

Which group of individuals is in the best position to spot early warning signs of economic trouble? There's a good case to be made for corporate chief financial officers (CFOs). These executives know how their companies are performing financially before anyone else. And if American businesses begin to stumble, the U.S. economy is likely headed for a rough patch.
Many CFOs are decidedly pessimistic these days. The latest CNBC CFO Council Survey found that 60% of CFOs expect a U.S. recession later in 2025. Another 15% predict a recession next year. Ninety percent of the CFOs surveyed believe President Trump's tariffs will cause inflation to rise.
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What should investors do if these CFOs are right? Here are three stocks to own if a recession is coming.
1. Dominion Energy
Utility stocks typically hold up better than most during an economic downturn. Dominion Energy (NYSE: D) ranks as one of the best utility stocks, in my opinion.
Dominion provides electricity to 3.6 million customers in Virginia, North Carolina, and South Carolina, It also provides natural gas to around 500,000 customers in South Carolina. Individuals and businesses will need electricity and natural gas regardless of what's happening with the economy.
The company shouldn't be impacted much by tariffs. If its prices do rise, Dominion Energy would likely be able to pass any increases along to customers, although it would need to secure regulatory approval first.
Unsurprisingly, Dominion Energy's shares are up so far in 2025 while the major market indexes have fallen. This performance reflects the resiliency of the stock. Investors don't have to worry about an absurdly high valuation with Dominion, though: Its forward price-to-earnings ratio is a reasonable 16.5.
What if a recession doesn't materialize? Dominion should still be a good stock to own over the long run. The construction of new data centers should provide a strong tailwind for the company, especially considering Virginia is home to the world's largest data center market.
2. Vertex Pharmaceuticals
A physician looks at the GDP numbers before deciding whether to prescribe a medication that could save the life of a patient with cystic fibrosis (CF). A doctor opts to hold off on giving a patient experiencing acute pain a non-opioid drug that could relieve the pain because the economy is in recession. Do these scenarios seem implausible to you? If so, you might want to own Vertex Pharmaceuticals (NASDAQ: VRTX) if you believe corporate CFOs are right about a recession coming.
Vertex's fortunes were built on the back of its CF franchise. The company markets the only approved therapies that treat the underlying cause of CF. Its newest CF drug, Alyftrek, seems likely to become the most successful CF therapy for Vertex yet.
The company also recently won U.S. regulatory approval for Journavx, a non-opioid drug that's the first new type of pain therapy in more than 20 years. Journavx should have tremendous commercial potential because it's effective at alleviating pain but isn't addictive.
I think the momentum for Alyftrek and Journavx could buoy Vertex if a recession hits. The biotech stock could be an even bigger winner, though, if it reports good news from its late-stage clinical studies. Vertex's pipeline features four phase 3 programs, including a potential cure for severe type 1 diabetes.
3. Walmart
No list of recession-resistant stocks would be complete without mentioning Walmart (NYSE: WMT). The company isn't completely immune to the effects of economic malaise, but is well-positioned to fare better than most.
Walmart, of course, is the world's largest retailer. More importantly (at least if a recession is coming), the company is the largest discount retailer. Customers should continue shopping at Walmart even during a recession because of its "everyday low prices."
Like Dominion Energy (but not Vertex), Walmart pays a quarterly dividend. While the retail giant's dividend yield isn't very high, its dividend track record is impeccable. Walmart is a Dividend King with 52 consecutive years of dividend increases.
The main knock against Walmart is its valuation. Walmart's shares trade at roughly 33.6 times forward earnings. The stock has been even more expensive in the past, though, without hurting its momentum.
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