There aren’t too many economic indicators out there right now that indicate that the health of the global economy is tip-top. Inflation across the world remains elevated, oil prices are back over US$100 a barrel, and government debt, particularly in the United States, continues to balloon at an arguably unsustainable rate. I’m not saying that all of this means a recession is on the horizon. But it does, at least in my view, indicate that investors should keep their wits about them over (at least) the rest of 2026.

If you are an investor who is worried about a recession, you might want to focus your investing energy on ASX shares that arguably thrive in all kinds of economic weather. That doesn’t mean that these ASX shares won’t see potentially severe price impacts if there is a recession or stock market crash, of course. But it does mean that the underlying fundamentals of these companies would be relatively unaffected if the worst were to happen.

So with that in mind, here are two ASX shares whose earnings should prove to be a veritable fortress if the global economic weather does take a turn for the worse.

2 ASX shares to ride out a recession

First up, we have ASX 200 telco Telstra Group Ltd (ASX: TLS). Telstra is a company we all know and may or may not love. What we can say with certainty is that Telstra continues to enjoy a status as Australia’s largest and most popular telco. The company boasts what is almost universally regarded as the best mobile network in the country. That’s a moat that allows Telstra to keep many customers in-house and competitors at bay.

The beauty of Telstra’s business model is that it is highly resistant to recessions, inflation, and other economic maladies. Most of us would give up a lot before our mobile phones and internet connections if times got tougher. Telstra’s earnings were unaffected by the COVID recession, and I expect them to emerge from the next economic downturn, whenever that may occur, largely unscathed.

Next, let’s talk about Coles Group Ltd (ASX: COL). Coles is another stock we’d all know well. It is the second-largest supermarket chain operator in the country, and also owns the Liquorland bottle shop chain. Coles shares many of the same attributes as Telstra. It is highly defensive (we all need to eat, drink, and stock our households), for one. For another, it is resistant to inflation, given it is one of the lowest-cost providers of those consumer staples on the market.

As such, I wouldn’t expect to see much in the way of earnings impacts if bad economic weather hits the Australian economy. Coles’ hefty, fully-franked dividend (which the company has increased every year since 2018) provides some further certainty to investors.

The post Worried about a recession? These ASX shares would be just fine appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX small-cap shares are often some of the most exciting ideas to buy because of how they may be undervalued relative to their potential.

Many of the largest companies have reached a mature stage where revenue growth is now fairly subdued. Smaller companies are much earlier on in their growth journey, so there’s much more compounding potential for earnings to grow in the future.

The business I’m going to highlight today is Beacon Lighting Group Ltd (ASX: BLX). It’s one of the top picks inside the investment portfolio of WAM Microcap Ltd (ASX: WMI), a listed investment company (LIC) that targets some of the smallest ASX stocks to generate returns for shareholders.

The WAM investment team recently highlighted why they think the business is an opportunity.

Accelerating sales momentum for the ASX small-cap share

The Beacon Lighting share price has taken a bit of a beating in recent times; it’s down by 42% over the past year, at the time of writing.

At this lower price, it could be undervalued, and WAM is attracted to the specialist residential and commercial lighting retailer.

In August 2026, the Beacon Lighting share price rose strongly (up 18.7%) after the release of its FY26 results.

That 2026 annual report showed record underlying sales of $340.3 million and continued momentum across its growing trade division.

FY26 trade sales grew by 14.5% during the year and represented more than 43% of relevant sales, which highlighted the “success of the company’s strategy to expand its exposure to commercial customers”.

The WAM investment team also noted that the Beacon Lighting share price responded positively to accelerating sales momentum, with comparable store sales increasing 7.1% in the fourth quarter of FY26.

Wilson Asset Management said that this momentum has continued into the start of the 2027 financial year.

The fund managers and analysts overseeing WAM Microcap remain positive on Beacon Lighting Group’s outlook, citing its strong balance sheet and multiple growth opportunities, including store expansion, digital initiatives, and increased trade penetration.

What is the Beacon Lighting valuation?

According to the projection on CMC Invest, the ASX small-cap share is valued at 14 times FY27’s estimated earnings. The business is also projected to pay an annual dividend that equates to a dividend yield of 4.25% excluding franking credits and 6.1% including franking credits.

The forecast on CMC Invest suggests the business could see further earnings growth in FY28, with potentially 10% profit growth. The dividend could also increase again.

At those valuations, I can see why WAM thinks the ASX small-cap share is a compelling buy.

The post An ASX small-cap share to buy for its bright future appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Wam Microcap. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Meridian Energy Ltd (ASX: MEZ) share price is in focus after the company reported national hydro storage rising to 155% of average and total August generation up 21.1% on last year.

What did Meridian Energy report?

• National hydro storage at 155% of historical average by 7 September 2026 (from 128% a month prior)
• South Island storage reached 178% of average; North Island storage fell to 79% of average
• August 2026 generation was 1,432 GWh, up 21.1% year on year
• Meridian’s August inflows were 145% of average, supported by wet conditions in the South Island
• Retail sales volumes in August dropped 4.7% compared to the same month last year
• Average generation price received fell 62.3% year on year in August

What else do investors need to know?

August saw record peak electricity demand in New Zealand, with Meridian and its peers supporting the grid through strong renewable generation and battery systems. Despite the headline drop in retail volumes, large business segment sales climbed by 5.1% compared to August 2025.

The company’s hydro catchments remain healthy, with Waitaki storage at 161% of historical levels and Waiau at 172% by month’s end. El Niño conditions are strengthening, which may mean drier conditions overall, but could also bring extra rainfall to the hydro catchments.

What did Meridian Energy management say?

Chief Executive Mike Roan said:

We and the sector comfortably met that demand peak in early August, through high renewable generation and the system benefits of North Island batteries. It was another sign of a system that’s performing extremely well.

El Niño conditions continued to strengthen through August, and are building further, supporting Meridian’s high winter-end storage levels. While El Niño may bring dry conditions, particularly in eastern regions, it can also bring increased rainfall to our hydro catchments, so we’re optimistic of maintaining strong hydro storage through the summer.

What’s next for Meridian Energy?

Looking ahead, Meridian expects its high hydro storage to provide flexibility heading into summer, even as El Niño weather patterns develop. The company continues to monitor regional rainfall closely while keeping an eye on electricity demand and market pricing.

Ongoing investments in hydro and wind capacity, as well as battery infrastructure, should help Meridian stay resilient and adaptable in New Zealand’s changing energy landscape.

Meridian Energy share price snapshot

Over the past 12 months, Meridian Energy shares have declined 14%, trailing the S&P/ASX 200 Index (ASX: XJO), which has declined 1% over the same period.

View Original Announcement

The post Meridian Energy reports record hydro storage and August generation growth appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.