With unemployment on the rise, fears are once again circulating about a potential recession. But by knowing which shares to buy, investors can position their portfolios to weather the potential storms ahead. That’s why some institutional analysts have been issuing recession-resistant recommendations to clients.
So what are the experts saying to buy right now?
1. Defensive pharma
Even during economic meltdowns, demand for healthcare often remains robust. As such, the pharmaceuticals and biotech sector has historically outperformed during times of crisis. And as of December, the analysts at AJ Bell have flagged GSK (LSE:GSK) as a defensive stock to consider in this industry.
Like many UK shares, the vaccine and drug specialist doesn’t demand a lofty valuation, with its shares trading at just 14 times earnings, paying out a 3.4% dividend yield at the same time. That’s despite the business delivering far better than expected earnings in its latest results.
Despite this operational momentum, there’s the looming threat of a patent cliff plaguing its long-term growth potential. While the group does have a diversified pipeline of new drug candidates undergoing clinical trials, there’s no guarantee these will succeed.
Nevertheless, with a proven track record and prudent leadership, GSK could indeed be among the list of good shares to consider buying now in preparation for a potential recession.
2. Groceries are just as important
Beyond healthcare, shopping trips to the supermarket also don’t tend to die down. And while consumers might decide to downgrade away from premium brands, companies like Tesco (LSE:TSCO) have the scale to protect margins during weaker spending environments.
The UK’s largest supermarket has been on a bit of a rampage of late, climbing by almost 40% since last March.
Even with the competitive pressure coming from discount retailers, Tesco has proven quite effective at retaining footfall. So much so, that in its latest results, management upgraded its operating profit guidance from £2.7bn-£3bn to £2.9bn-£3.1bn.
Subsequently, experts at JP Morgan and Deutsche Bank have been upgrading their share price targets for the business to around 500p. While that doesn’t scream explosive growth compared to the 450p share price today, it nonetheless signals resilience – something defensive investors definitely favour.
However, as with every investment, there are some notable risks to consider. Even with robust margin protection, that doesn’t change the fact that they remain razor-thin. And with the recent increase in the minimum wage, the group’s profits could come under pressure even if sales continue to be resilient during a recession.
Yet, just like with GSK, Tesco’s track record of navigating economic wobbles is long and impressive. As such, it also looks like a recession-resistant stock that conservative investors may want to consider in 2026. But these aren’t the only defensive opportunities in the stock market that I’ve got my eye on right now.
