You Can Pick Stocks in a Recession

Here are some other companies that did well in the last recession and are worth looking at now:

H&R Block(HRB Quote). H&R Block is getting hit by New York Attorney General Eliot Spitzer's lawsuit over money-losing IRA accounts. I'm not a buyer yet, but eventually this is going to be a great value pick if it declines further. Recession or not, everyone has to pay taxes, and in a recession, people are more likely to use a retail chain like H&R than an expensive accountant. From Feb. 1, 2001, to Feb. 1, 2002 (the period surrounding the last recession), H&R shares went from $10.84 to $23.13, an increase of 113%.

Fred's(FRED Quote). All of the dollar stores have experienced declines as Wal-Mart has finally realized they were a competitive threat. That said, they will do well again if a recession hits. In the last recession, Fred's went from $8.13 to $19.15, an increase of 135%.

Gap(GPS Quote). During tough times, shoppers turn away from Armani and Brooks Brothers and go back to the basics with Gap, Banana Republic and Old Navy. Gap shares went from $10 to $25.74, an increase of 157%, during the last recession -- a period (February 2001 to February 2002) in which the S&P 500 declined 17%.

Pep Boys(PBY Quote). When people want to get every last mile out of their cars, they need to fix them to avoid trading them in. In the 2001 recession, Pep Boys rose from $4.80 to $16.45 , an increase of 242%. I've written about Pep Boys recently because shareholder activist Barrington Capital has been accumulating shares.

Career Education(CECO Quote). When people are unemployed, they have more time on their hands and want to improve their skills and resumes so they can get better jobs. Career Education, despite numerous problems that have been written about ad nauseam, fulfills that need in a recession. Career Education shares went from $10.63 to $16.50 in the last recession, an increase of 55%.

Don't despair in a recession. Of the current batch of S&P 1500 stocks that were around in the last recession (1,345 of them), 716 (53%) were up during the period from February 2001 to February 2002. That's a lot of stocks to choose from, and there's no reason to suffer lower returns going long in a bear market and recessionary economy.

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Please note that due to factors including low market capitalization and/or insufficient public float, we consider Medallion Financial to be a small-cap stock. You should be aware that such stocks are subject to more risk than stocks of larger companies, including greater volatility, lower liquidity and less publicly available information, and that postings such as this one can have an effect on their stock prices.

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