During the 2008-2009 US recession folks were amazed how well a few retail sectors had done when all the other companies were tanking. How is it possible that auto parts retail chain stocks were not crushed as all the other retail stocks were in the proverbial toilet? Now it has always been said in the automotive industry that during hard economic times, folks do not go out to buy new cars and therefore they are forced to keep their old cars and fix them up. used auto parts
It thus, stands to reason that discount auto parts are a natural and perhaps somewhat recession proof. That does not mean they are going to break any speed records rather merely that they can survive without taking the huge hit in sales. Still, is this a reason for the stock to jump 350%? No, the answer is no, instead they just should not go down like the others. So, why the flight to these so-called recession proof, really recession resistant, stocks?
The next interesting and perhaps also predictable recession resistant stock is that of the Dollar Store type businesses. Still during this last recession the stock prices rose on some of these companies by 200%, and yet Wal-Mart, which is an extremely well-run company, was flat, stock price actually down a little in fact, so one has to ask why?
With this in mind one would have to say that these stocks have run their course and it’s time for anyone who rode them up, to take their profit now and get into more solid companies with a long-term mind set. Consider all this.