3 stocks to buy in case a major recession doesn’t materialize

There are many reasons why investors think a major recession could be on the horizon. Sticky and persistent inflation continued to put pressure on low- and middle-income workers. Impressive cycles of rate hikes by the Federal Reserve and other global central banks have attempted to dampen economic activity to limit rising prices. These moves, while not explicitly intended to cause a major recession, can do just that. And that ignores the myriad of other concerns, from ongoing geopolitical disputes to potential supply gluts in certain sectors.

In short, the current macroeconomic environment is risky. Still, if central banks do what they traditionally do and pump liquidity into markets at the first sign of stress, maybe we can avoid a major recession.

If so, below are three stocks to buy, or at least consider putting on your watchlist. Each has the potential to soar if a major recession does not materialize.

Coinbase (COIN)

A well-known crypto exchange, Coinbase (NASDAQ:PIECE OF MONEY) allows users to buy and trade cryptocurrencies. Some investors see digital assets as a hedge against recession, and After a brutal 2022, COIN is up 137% so far this year.

Much of this gain is related to the rise in value of major cryptocurrencies. Coinbase’s business model is quite simple. The company earns the lion’s share of its revenue via transaction fees. So when trading volumes increase, that is good news for Coinbase.

The company’s recent financial results show what happens when liquidity starts to dry up in the crypto market. The company reported a loss of $2.46 per share for the last quarter of 2022. Although this was less than Wall Street’s forecast of -$2.55 per share, it was still significant. Additionally, while revenue of $629 million also beat expectations, it was down about 75% year-over-year.

That said, if the Fed can coordinate some sort of soft landing, or just cut rates, Coinbase should be a key beneficiary.

Shopify (SHOP)

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If a major recession looms on the horizon, Shopify (NYSE:SHOP) is a stock that investors may want to avoid. This company, which has disrupted the e-commerce market by offering solutions allowing small and medium-sized businesses to create online stores, is closely linked to national and global economic growth. If companies stop setting up or turn to other players such as Amazon (NASDAQ:AMZN) to manage their logistics, Shopify’s growth trajectory could be in question.

Of course, we’ve all seen how impressive Shopify’s growth has been in the pandemic environment. Given its strong sales growth trajectory during this period, many considered the title to be the “next Amazon”. Investors, however, were mistaken in believing that Shopify’s pandemic growth levels were sustainable.

That said, if we can avoid a major recession, Shopify is a company that I think is poised for much better year-over-year growth comparisons.

Video zoom (ZM)

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In the last 18 months, Enlarge video (NASDAQ:ZM) suffered several significant setbacks. Initially thriving during the pandemic, the company has gained notoriety as one of the biggest winners in the shift to remote working.

Of course, like many pandemic winners, ZM stock has since plunged, losing nearly 90% from its peak of $588.84 in October 2020, due to increasing competition and changing macroeconomic conditions.

Like the other names on this list, too much growth has been taken into account. The idea that the tailwinds associated with the pandemic might continue was wishful thinking.

However, if monetary policy becomes more accommodative and we get a new round of higher risk stocks, Zoom is a stock that could really take off. Right now, it’s a company that’s high on my watch list.

As of the date of publication, Chris MacDonald had (neither directly nor indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.