Non-cyclical stocks are those whose underlying businesses are not disrupted by economic cycles. These companies offer products and services that meet consumers’ basic needs like food, power, water, and gas. Such non-cyclical stocks are also regarded as defensive stocks because they can help defend portfolios against an economic downturn

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There are four basic stages of an economic cycle:

• Expansion: This is called a period of sustained growth. New jobs are being created and company profits increasing. This phase can last for several years.
• Peak: A time of slowing growth as growth hits a plateau. Inflation may begin to increase at this stage.
• Contraction: A period of economic decline, also called a recession. The economy shrinks rather than grows. Unemployment rates may increase, though inflation may be on the decline. How long a contraction period can persist, depends on the circumstances which lead to it.
• Trough: A transitional time when the economy stops declining and begins to recover. This is the lowest point in the economic cycle.

The key characteristics of a non-cyclical stock are:

• Better performers during periods of economic contraction
• Associated with goods or services that consumers consider essential
• Less sensitive to changing economic environments
• Earnings are relatively stable 
• Are less volatile in terms of stock returns
• Typically hold up well during periods of economic contraction
• Most non-cyclical stocks pay dividends

Key Sectors of Non-cyclical Stocks

While not every cyclical stock can be categorized into the below industries, here is a list of key sectors of non-cyclical stocks:

• Consumer Staples
  • Food and Staples Retailing
  • Food, Beverage & Tobacco
  • Household and Personal Products
• Telecommunication
• Energy
• Health Care
• Residential REITs
• Utilities

The Best Non-Cyclical Stocks

Here is the list of best Non-Cyclical stocks to invest in 2023:

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