2 U.S. Sectors to Shield You From Europe

The recession goblins are invading Europe's shores, and the fear over a
eurozone takedown of global equity market s is beginning to become reality.
Stocks in the U.S. have slumped about 4% so far this week, while European stocks
have fallen approximately 5%. That decline was spurred in part by fresh warnings
over the potential impact of the euro zone's debt crisis on the global economy
and banking system. Ratings agency Fitch cautioned this week that U.S. banks
could be "greatly affected" if Europe's debt crisis isnt resolved quickly.
But if the region rolls over into recession, the impact will be felt in
multinational companies of nearly every stripe. In These U.S. Exporters Could
Get Stuck in Europe's Muck , I discussed some sectors and specific companies
that are particularly exposed to Europes woes. On the flipside, to insulate your
portfolio from a potential European debt shock, one good strategy is to hold
equities that have little or no European exposure. That means choosing good
old-fashioned U.S. companies that do all of their business right here at home.
Toward that end, here are two recession-resistant sectors investors should check
out. The first sector is deep-discount retailers. One of the best of breed here
is Family Dollar Stores (NYSE: FDO ). It recently reported better-than-expected
earnings for its fiscal fourth quarter, with same-store sales jumping 5.6% and
earnings surging 18% year-over-year. Like other bargain-store retailers e.g.
Dollar General (NYSE: DG ), Dollar Tree (NASDAQ: DLTR ), 99 Cents Only (NYSE:
NDN ) and Big Lots (NYSE: BIG ) Family Dollar's revenue has steadily climbed
over the past several years as consumers still rattled by the Great Recession
continue looking for the best bang for their buck. Simply put, if Europe's
debt issues do indeed force the region into recession, a good place to seek safe
harbor will be homegrown recession-busting retailers. Another domestic sector
completely insulated from Europe, and that's also collecting big profits, is
energy/power generation companies. Standout names include American Electric
Power (NYSE: AEP ) Constellation Energy Group (NYSE: CEG ) and Duke Energy
(NYSE: DUK ). The thesis here is that no matter what the euro zone's GDP is
next quarter, Americans are still going to need the same amount of electric
power and natural gas as they've always needed, and perhaps more. Disclosure:
At the time of publication, Jim Woods held no positions in any of the stocks
mentioned in this article.