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The year’s barely begun and yet there’s already talk of the UK slipping into recession in 2025, especially if inflation bounces higher than expected. Now, I have no idea if this gloomy prediction will play out or not. But I’ve been looking at FTSE 100 stocks for investors to ponder buying if it does.
A plaster for the pain
History’s shown that healthcare stocks tend to hold their own during tricky times. It may sound overly simple in an investing world that thrives on big numbers and long-winded explanations, but we all get ill from time to time, regardless of the state of the economy. Despite performing poorly in 2024, this is why I like the look of global biopharma firm GSK (LSE: GSK).
GSK’s last year was impacted by the (now-settled) US class action lawsuit against heartburn and indigestion treatment, Zantac. Donald Trump’s appointment of noted vaccine sceptic Robert F Kennedy Jr to ‘make America healthy again’ was also never going to go down well with investors of a company that specialises in, well, producing vaccines. This latter could continue weighing on sentiment for a while.
However, recent share price slippage leaves GSK trading at a price-to-earnings (P/E) ratio of just eight. The forecast dividend yield stands at 4.8% too. That may help to ease the pain if this year turns out to be an absolute rotter.
As defensive as they come
Also proving resilient during recessions are utility stocks. Just as we rely on medicine to get us well again, we always need access to water, electricity and gas. Since water firms have been in the news for all the wrong reasons recently, my sector favourite remains power provider National Grid (LSE: NG).
The Grid’s shares ended 2024 slightly down. Although disappointing, I’m sure existing holders would take this considering the stock were far lower in May. This followed news of a 20% dividend cut and a £7bn share issue as it transitions to low-carbon energy sources.
The market could be in an even more forgiving mood if the proverbial hits the economic fan in 2025. Not only does the company’s current P/E of 13 look reasonable, the post-cut yield still stands at a juicy 4.9%.
The big debt load need monitoring. However, the predictability of National Grid’s earnings means it doesn’t worry me too much as things stand.
Boring but brilliant
It seems like an age since I last looked at consumer goods beast Unilever (LSE: ULVR) and I think I know why. Put simply, it isn’t a particularly exciting business. But when dark economic clouds gather, that’s actually what an investor might want. The bull case here is that people tend to keep buying the same food and household products they always have. A life without Marmite? Not worth considering.
Of course, a risk here is that shoppers will switch to cheaper alternatives. But I reckon it’s restaurants and high-end retailers that will really suffer from more penny-pinching. To paraphrase Apple legend Steve Jobs: “If you want to make everyone happy, sell ice cream“. Well, Unilever does that by the tub load!
It also had a relatively great 2024. I cautiously optimistic this momentum may continue as people batten down the hatches.
