Recession ASX stocks are back: Consider buying the dip this April

I think this is a great time to buy stocks.

A female executive smiles as she carries out business on her mobile phone.

Image source: Getty Images

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

The recent sell-off of ASX stocks because of US tariffs could be a great time to invest. If I could choose when to invest, I'd obviously choose to buy when share prices are lower. Prices don't drop for no reason – investors are concerned about a possible recession, or at least a slowing of global growth.  

With global trade between the US and China suddenly looking quite precarious, there are questions about what's going to happen next.

There are some sectors that have suffered through some pain, which could be 'buy-the-dip' ideas. Defensive ASX shares could also be good investments.

I'll run through some areas where I see opportunities.

Recession ASX stocks

Some businesses may be less vulnerable during this time because of their ability to generate consistent earnings throughout the coming period, whatever happens next.

I would describe these businesses as ones that provide essential products or services.

Telco Telstra Group Ltd (ASX: TLS), energy infrastructure business APA Group (ASX: APA), supermarket business Coles Group Ltd (ASX: COL) and investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) are some names that come to mind.

They may be resilient and reassuring investments to own during this uncertain time.

Interest rate-sensitive stocks

There are some businesses that have been harmed by higher interest rates, such as real estate investment trusts (REITs) and ASX retail shares.

While predictions aren't certain to come true, multiple economists are thinking that the Reserve Bank of Australia (RBA) will cut rates in May, with more cuts possible later this year.

If the RBA does reduce rates multiple times this year, I think the businesses harmed by high interest rates could be the ones that benefit the most.

I'm thinking of ASX stocks like Nick Scali Limited (ASX: NCK), Accent Group Ltd (ASX: AX1) Centuria Industrial REIT (ASX: CIP), Charter Hall Long WALE REIT (ASX: CLW), and Centuria Capital Group (ASX: CNI).

ASX mining stocks

One of the main buyers of resources globally is China, so any noticeable economic pain there could mean a hit to demand. However, if the Chinese economy is negatively impacted, I'd expect the Asian superpower to launch stimulus to support its different industries, which could then support commodity prices.

I believe declines for companies like BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) and Sandfire Resources Ltd (ASX: SFR) are longer-term buying opportunities.

Hard-hit

Some ASX stocks have been sold off heavily during this period. While investor fears are understandable, I don't believe that the negatives of the trade war situation will last forever. Current declines could be a good time to be contrarian.

The ones that have seen some of the biggest declines could be contenders for a recovery, such as GQG Partners Inc (ASX: GQG) and Global X Fang+ ETF (ASX: FANG).

Motley Fool contributor Tristan Harrison has positions in Centuria Capital Group, Centuria Industrial REIT, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Apa Group, Coles Group, Telstra Group, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Accent Group, BHP Group, Gqg Partners, and Nick Scali. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Opinions

A young couple sits at their kitchen table looking at documents with a laptop open in front of them.
Opinions

Why I'd buy these top ASX 200 shares next

Growing businesses are compelling. These two are growing significantly.

Read more »

A elder man and woman lean over their balcony with a cuppa, indicating share rpice movement for ASX retirement shares
Small Cap Shares

Why I think this ASX small-cap stock is a bargain at 58 cents

This stock looks like a great buy, in my opinion.

Read more »

A young man wearing glasses writes down his stock picks in his living room.
Opinions

2 amazing ASX shares I wish I'd bought earlier

I think these stocks are performing incredibly well.

Read more »

ASX 200 retail shares a woman smiles over the top of multiple shopping bags she is holding in both hands up near her face.
Opinions

Up 90% in a year, is it too late to buy Zip shares?

Should investors buy this stock now or wait until later?

Read more »

A trio of ASX shares analysts huddle together in an office with computer screens all around them showing share price movements
Opinions

2 of the best ASX 200 shares to buy right now

I think these stocks are excellent buys for the long-term.

Read more »

Concept image of a businessman riding a bull on an upwards arrow.
Opinions

I'm very bullish on these 2 ASX stocks

I think these are two of the best ASX investments money can buy.

Read more »

Young businesswoman sitting in kitchen and working on laptop.
Opinions

Should I buy Berkshire Hathaway or Soul Patts shares?

Both have been stand out investments over the long term.

Read more »

A photo of a young couple who are purchasing fruits and vegetables at a market shop.
Opinions

Here are 2 of the ASX's most hated shares. Which should I consider buying?

Could today's dogs be tomorrow's stars?

Read more »