Recession-proof stock #4: Potash (POT)

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Recession stock: PotashIn a recession, most professionals suggest that investors take a defensive posture.

That theory states that buying stocks with great balance sheets and stable cash flow is a way to withstand the downdraft of a bear market. If you own stocks of companies with products that consumers have to buy, you can expect to beat the market performance-wise.

Again, this bear market has been different in many ways. Even the most defensive stocks are losing value in a big way. None of it makes sense.

One sector that should be insulated during a recession is the food space. We have to buy food, right?

Specifically, I want to own stocks of companies that are leveraged to the agriculture space. That means fertilizer, and names like Potash (NYSE: POT).

As hedge funds were forced to liquidate, shares of POT dropped at a time when they should have done well relative to the rest of the market. The selling creates an opportunity for investors looking for recession-proof stocks.

Buy Potash, and let others worry about the recession.

Click here for the full list of recession-proof stocks.

Jamie Dlugosch is a contributor to InvestorPlace.com.

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Last updated: February 09, 2010: 11:39 PM

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