These two stocks can beat the recession and capitalise on a recovery

There is nothing like a recession to weed out weak companies. For far too long, many businesses had assumed that easy money was a constant and they did not need to maintain sound finances. Similarly, too many companies that lacked a competitive advantage had been able to survive thanks to favourable monetary and fiscal policies that are now quickly coming to an end. For investors, the key focus in today’s deteriorating economic environment should be on owning financially sound businesses that can survive weaker trading conditions. They must also ensure that their holdings have a clear competitive advantage over their rivals. Stocks that lack one or both of these attributes should, in Questor’s view, be avoided. Fortunately, Big Yellow, which was tipped as a buy in this column in December 2018, scores highly in both areas. The self-storage specialist’s half-year results, released last week, showed that it had the financial standing to navigate the current cost of living crisis and wider economic slowdown. Its debt-to-equity ratio currently stands at around 23pc and its policy of ensuring that half of all borrowings are at a fixed rate is likely to prove beneficial in the current period of interest rate rises. Its...

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