How stock selection can help recession proof investment decisions

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Owning stocks with pricing power is like winning the lottery because it allows a company to protect its profit margins.

Every recession is different in terms of the drivers, the length, the depth and of course, the speed at which the economy can recover.

This is what we expect to happen as we move further into the year. What makes it even more challenging, is that companies are not only going to face slowing top-line demand , but they are also facing a rapid escalation in costs whether it be from the explosion seen in raw material and utility prices to near double-digit increases in the cost of labour.The good news is that just as each and every economic recession is different, so too is the impact of an economic slowdown on corporate earnings.

Second, there are stocks that have the ability to pass on cost increases or where demand is less sensitive to broader activity levels . These are stocks that we consider having pricing power –Advertisement

 

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