Investing In A Recession: The UK Firm Set To Thrive In The Downturn

One company looks set to thrive in the recession. Read on to discover more...

The economy is teetering on the brink of recession. GDP growth slowed to a miserly 0.2% over the second quarter of the year. And don’t hold your breath for a turnaround. Forecasts for the rest of the year have raised the odds of a recession.

This is bad news for the majority of companies. But there is one UK firm whose business model is a perfect play on the recession.

You see, stock markets — like the economy — work in cycles. In an economic boom, certain stocks do spectacularly well. We call these procyclical stocks — they move in tandem with the economic cycle. When economic boom turns to bust, these stocks tend to be hardest hit.

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Then you have the non cyclical stocks. The evergreens. Otherwise known as defensive stocks, these can defend your portfolio against a downturn. Non cyclical sectors would include utilities and pharmaceuticals. Companies that make things we’ll always need, rain or shine.

Investing in a recession: the best kind of stocks to own in a downturn

Finally we have countercyclical stocks. These are stocks — like the one I’ll tell you about — that tend to go up when the economy goes down.

In April 2006, The Fleet Street Letter advised its readers to invest in one such stock. We wrote at the time:

The nation’s record burden of debt — and the prospect of a pension-less old age — are at last entering the mainstream and capping consumer spending. Add that to the recent turn in the global interest rate cycle, and now is the time to batten down the hatches.

This long term view is starting to bear fruit. The share is already up. Granted that’s not a spectacular return. But then again, we haven’t yet entered a recession.

We believe the best is yet to come from this investment. You see, this company specialises in helping businesses that have run into difficulty. In a nutshell, the more struggling businesses there are, the better it is for our chosen countercyclical play.

Investing in a recession: this company says business is booming!

In fact, business has never been better. In its quarterly research report, the company reported a near seven-fold annual rise in firms with "critical" problems.

We believe this investment offers investors an excellent way to play the economic downturn. As the credit crunch grinds on, fewer and fewer businesses will be able to use debt to solve their problems. That should mean more work for our recommended company.

Yesterday I emailed Fleet Street Letter subscribers and reiterated our Buy recommendation. Today I offer you the chance to join them.

Read on to find out about becoming a Fleet Street Letter subscriber, and to discover more about this unique countercyclical investment.

Theo Casey

Investment Director

The Fleet Street Letter

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P.S. If you enjoyed this article then we encourage you to sign up for The Fleet Street Letter. Get contrarian, cutting-edge analysis for sensible, long-term investments that secure you high growth and healthy dividends.

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