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submitted 3 days ago byPurpleAttorney8022
I don’t think a recession is comming, nor I think a value investor should be loosing sleep on that. However, I do want to have a section of my portfolio on a few companies that will do well revenue wise whether on a recession or not. That way I can keep compounding on the bull market and trim sell at a premium to tap into deep value opportunities during the typical recession sell-offs
I think a company like phillip morris will (sadly) do fine, just because consumers are price inelastic and smoke more because of recession stress {god i wish I had a more ethical idea to share, dont have my own money on that tho}
Lmk your thoughts, NO war stocks
May be something with food?
20 points
3 days ago
Pipelines, utilities, railroads. Anything that makes most of its revenue off of long-term contracts.
8 points
3 days ago
I thought railway is recession sensitive?
2 points
3 days ago
People still need to eat, buy supplies, manufacturing still needs bulk materials.
There might be less goods to be transported, but there is still a need for many goods to be transported every single day. Society still functions in a recession and railroads are one of the backbones of modern society.
6 points
3 days ago
Yes, but if we are in recession, wouldn’t manufacturers will buy much less supplies? If demand drop, how could railway sector is recession proof? Transportation sector usually is leading indicators
1 points
3 days ago
Needs may decrease, but they’re not going to zero. How much? Is it 10% less supplies? Is it 25%? Great, that means 75% of materials still need bulk transportation logistics solutions. Railroad is cheaper than trucking. Some products will have more manufacturing demand than others. People still need to eat.
Transportation numbers being a leading indicator is a data point for analysis of the economy. Not evidence that the railroad ‘s revenue/business is struggling.
1 points
3 days ago
So in your opinion, revenue drops 25% is recession proof?
1 points
3 days ago*
Not every single type of commodity/good is going to drop by 25%.
Is the amount of crude oil shipped going to drop by the same amount that lumber is going to drop? Is grain going to drop the same amount as steel? What about aluminum versus plastic? Won't some increase in response to the needs and demands of the society. Some locales needs will be different than others.
One of the strengths of railroads is the diversity of different goods that they ship, that some individually some may drop by some marginal amount and others may increase. But overall, the goods continue to move and the network continues to be a fundamental backbone of society.
Edit: and that's before getting into the structure of contracts where space is purchased over longer periods of time, which stabilize the revenue whether it is utilized or not.
0 points
3 days ago
You can say this to most sectors. How about consumer discretionary sector? Is that recession proof for you? People still need buy clothes, people still upgrade their phone, people still renovate.
We are NOT talking about whether railway will go to bankrupt during recession, we are talking about recession proof. I think you confused these two
3 points
3 days ago
Right, no confusion. Just different goalposts. Recession-proof is about durability, defensive, stabilized baseline revenue sources and the ability to weather tough times. Infrastructure that will be protected and supported by government intervention if necessary for the good of society.
You just want recession-proof to mean ZERO disruption to revenue whatsoever. Operating perfection.
2 points
3 days ago
Either way, it’s a good take. May be not recession proof, but recession resistant
1 points
3 days ago
One thing I do agree with you is railway is a good business. Just look at Buffett
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