There's been plenty of recession talk in Australia and across the globe this year. It was seemingly spurred by rife inflation and resulting interest rate hikes, both adding to the soaring cost of living. But such recession concerns might have sparked a buying opportunity for some S&P/ASX 200 Index (ASX: XJO) shares.
And two in particular are catching the eyes of fund managers. Let's take a look at the ASX 200 shares tipped to gain if recession fears fade.
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Are these ASX 200 shares worth looking at?
Two sectors have been tipped as post-recession risk winners; lithium and building.
And TMS Capital's Ben Clark and Marcus Today's Henry Jennings told Livewire these ASX 200 shares will be their top picks if recession risks waver.
Pilbara Minerals Ltd (ASX: PLS)
Jennings told the publication that, if China emerges, COVID-19 fades into the background, and a recession doesn't occur, the world will likely ramp up its push towards electric vehicles.
And with that potential trend in mind, the fundie likes the look of lithium favourite Pilbara Minerals.
He also said his head has been turned by upcoming Australian lithium producer Core Lithium Ltd (ASX: CXO).
The Pilbara Minerals share price closed on Thursday at $3.06.
Reece Ltd (ASX: REH)
Looking to an entirely different sector, Clark said TMS Capital has been buying shares in ASX 200 plumbing and bathroom products supplier Reece. He told Livewire:
It's been sold down aggressively, and it's because of concerns about building and renovation activity, but I think that the renovation market here might hold up better than expected. Certainly, if recession fears fade it will.
But it's the company's MORSCO business that's really drawn Clark's eye. MORSCO is a leading US distributor of plumbing, waterworks, and heating and cooling equipment. It was snapped up by Reece in a $1.9 billion acquisition in 2018. The fundie continued:
MORSCO is the biggest player in places like Florida and Texas where there's huge amounts of house building and renovation happening. We still see some really good forward progress for Reece and it will certainly move if the market starts to get less bearish on a recession.
At Thursday's close, shares in Reece were worth $16.25 apiece.
