Retail and recession have a complicated relationship. On the one hand, a downturn in the economy will almost always hammer consumer spending, which means the sector is broadly exposed. However, such economic challenges often create huge victors in the space as it becomes a winner-take-all environment. With that in mind, here are some stocks to own, and some not to. In the last recession, it was cost-conscious retailers, like Dollar Tree and Dollar General that surged. High-priced, discretionary merchandise, like Williams-Sonoma and Restoration Hardware, did the worst. This seems likely to play out again, so take a look at Aaron’s, Dollar General, Five Below, National Vision, and Ollie’s Bargain Outlet.
FINSUM: Hard to argue with this logic, but we would not be surprised if the coming (potential) recession offered some surprises in terms of consumer behavior.