3 ASX shares to own if Australia tips into a recession

CSL Limited (ASX: CSL) looks a good bet for overseas exposure.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Generally macro-economic conditions or your perception of them should not affect what shares you decide to buy for your portfolio. This is because as an investor you should always aim to buy high-quality businesses on attractive valuations.

For example if you buy poor or non-investment grade businesses you're likely to get poor returns irrespective of whether we're in an economic boom or recession.

Vice versa applies in that if you buy a strong business on a reasonable valuations you should achieve good total returns over say a 3 to 5 year period and be able to ride out the negative consequences of any recession.

However, as the topic of what shares to own in the event of a recession seems to be popular with readers, I'd suggest if you were worried about a recession in Australia there are a couple of qualities in companies to look for.

First you should own companies with a large majority of overseas earnings and second you should own companies that benefit from a weaker Australian dollar.

This is not rocket science as companies that do little business in Australia are least likely to be affected by a recession, while a lower Australian dollar and rate cuts are logical symptoms of a recession.

In all honesty it would also make sense to probably sell a lot of your shares if you were convinced Australia or the world were set to fall into recession, but if you did want to own some shares as a bulwark against it the following three tick the boxes.

CSL Limited (ASX: CSL) earns around 98% of its profits and revenues overseas and investors also benefit as the Australian dollar falls as dividends for example are declared in U.S. dollars before being paid in Australian dollars.

Fisher & Paykel Healthcare Limited (ASX: FPH) is a New Zealand based retailer of equipment used to treat sleep disorders in patients. It has a superb track record of growth thanks to its large addressable markets and earns almost all its profits outside Australia.

BETASHARES ETF (ASX: NDQ) is an exchange traded fund that tracks the performance of the NASDAQ-100 Index of the US's leading tech companies. As such it provides excellent diversification away from the mining and residential housing leveraged Australian economy, while giving exposure to the world's best tech companies. You can't ask for much more than that!

Tom Richardson has no position in any of the stocks mentioned. You can find Tom on Twitter @tommyr345 The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of BETANASDAQ ETF UNITS. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Broker written in white with a man drawing a yellow underline.
Broker Notes

Brokers name 3 ASX shares to buy today

Here's why brokers are feeling bullish about these three shares this week.

Read more »

Woman with a scared look has hands on her face.
Broker Notes

Bapcor shares fell more than 30% yesterday. Should investors buy in the dip?

Is this a value opportunity?

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Broker Notes

Broker raises price targets on 2 ASX 200 shares to buy

Ord Minnett has just upped its 12-month share price targets on 2 buy-rated ASX 200 stocks.

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX All Ords stock just rocketed 34% on strong earnings growth

Investors just sent this ASX All Ords stock surging 34%. Here’s what’s happening.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why DroneShield, Gentrack, Metals X, and Northern Star shares are tumbling today

These shares are ending the week in the red. But why?

Read more »

A businessman looking at his digital tablet or strategy planning in hotel conference lobby. He is happy at achieving financial goals.
Share Gainers

Why Dimerix, Newmont, Regal Partners, and Titomic shares are storming higher

These shares are having a good finish to the week. Let's see why.

Read more »

Man drawing an upward line on a bar graph symbolising a rising share price.
Broker Notes

Morgans says these ASX can rise 30% to 50%

The broker has good things to say about these shares.

Read more »

Two businessmen look out at the city from the top of a tall building.
Broker Notes

2 ASX REITs to buy in July: expert

Is it time to consider ASX REITs?

Read more »