10 Unstoppable Stocks You’ll Want in Your Corner If the Market Crash
During heavy selling in the stock market, people often flock to what they consider a safe stock to avoid further losses. But this short-term mindset leaves the portfolio vulnerable to missing opportunities when the market eventually rebounds.
Nobody knows when the next bear market will come or how long it will last. If you piled into a safe stock during the COVID-19 sell-off in the spring of 2020, you likely missed out on massive gains from the sectors of the economy that experienced greater growth. Conversely, if you over-buy the pandemic winners over energy, industry or utilities stocks, you’ve missed out on the market outperformance that many names in those sectors have enjoyed since.
Instead of bobbing and weaving in and out of what works or doesn’t, a better strategy for bypassing a stock market sell-off is to have companies you can count on from a variety of sectors—including safe stocks, value stocks, and growth stocks.
With your back against the wall and your screen painted red as stock prices crash, you want a group of companies that can deliver consistent punches, and a few companies that have the potential to come up with knockout punches. Here are 10 stocks worth looking at right now.
Play essential consumer goods
Doing everything in safe stocks is a bad idea. But owning a few of the best safe stocks can be a great way to round out a diversified portfolio.
Procter & Gamble Inc (PG -0.84% ) It is the intrinsic earnings yield that is resistant to recession. Demand for P&G products remains steady despite market cycles, typically resulting in low to medium single digit organic growth during good times and bad.
Procter & Gamble is making tons of free cash flow that it uses to buy back its own stock, pay dividends and increase its dividend, which it has been doing for 65 consecutive years. For investors looking to secure a solid income stream, P&G is the stocks you want in your corner during a bear market.
Consumer discretionary play
Starbucks (SBUX -1.32% ) The stock is hovering around a 52-week low as concerns about inflation and uncertainty with the CEO position, union formation and a pending share buyback program contrast with broader market volatility. Starbucks now has a P/E ratio of 21.5, while the average P/E ratio over the past 10 years has been 31.5. Starbucks is generating record revenue and recovering well from the pandemic, and it has many ways to grow its business as it tends to grab and ride from the power of the Starbucks rewards program. With a dividend yield of 2.5% to boot, Starbucks stock is a convincing buy.
c. B. Morgan Chase (JPM -2.87% ) It is the largest bank stock by market capitalization. With a P/E ratio of 8.5 and a dividend yield of 3.1%, it is arguably the bank with the best CEO in Jamie Dimon. JPMorgan has it all. It has a reputation for dealing with ups and downs.
Higher interest rates tend to help the banks. But JPMorgan’s corporate and investment banking prefers lower interest rates, so the impact of higher interest rates is not as good as it might seem at first glance.
However, JPMorgan is a long-term winner and one of the safest financial services companies.
Like many stocks on this list, Walt Disney (DIS -2.79% ) The stock is hovering around a 52-week low. Disney’s investment thesis has changed dramatically in the past three years, and investors are still getting used to it. Disney has gone from an incredibly profitable media company that paid dividends to unpaid dividend stocks that don’t make as much money as they have been investing heavily in Disney+ streaming.
The COVID-19 pandemic has certainly disrupted Disney’s business — even more than the 2008 financial crisis — so the company will need more time to get back on its feet. However, data so far suggests that people are flocking to the Disney parks in droves, and the reception for the content it has produced for Disney+ has been adequate. Given that Disney stock is now lower than it was before the launch of Disney+, Disney appears to be a good buy now.
Larva ( cat -6.55% ) Manufactures equipment for oil and gas, shipping, railway, agricultural industry, construction, mining and other industries. Its exposure to the global economy means that its outcomes tend to ebb and flow based on economic cycles. But what makes Caterpillar uniquely positioned for the cycle we’re in right now is that it benefits from higher oil and gas prices and higher commodity prices. High commodity costs, be it base metals or energy, are among the driving forces contributing to inflation right now. If the economy enters a recession in the near term, it is likely that inflation will be the main reason for this. And because Caterpillar’s business units are primarily contributors to, not victims of, rising inflation, Caterpillar is well positioned to weather short-term headwinds in the broader economy.
Caterpillar could have a record year when 2022 is said and done. Even if it doesn’t, Caterpillar is a dividend aristocrat who has paid and increased its dividend for 27 consecutive years, making it a reliable property with upside potential. Aristocrat of distributions is Standard & Poor’s 500 The component that has paid and increased its dividend for at least 25 consecutive years.
NextEra Energy (ne -2.93% ) It is the largest regulated electrical utility by market value. It has spent decades investing in solar, wind and hydropower as it plays its part in decarbonizing the grid. But NextEra and its subsidiaries still manage significant assets in natural gas, giving it a diversified energy portfolio from both fossil fuels and alternative sources.
Stable contracts allow NextEra to gradually grow its business and support its profits. NextEra is one of the newest members of the Dividend Aristocrats roster, and has a 2% dividend yield.
Few oil and gas companies are as masterful as chevron (CVX -2.21% ). Chevron is a dividend aristocrat with a 3.5% dividend yield. It can break free cash flow when oil is $40 a barrel, and make a lot of money when it’s higher. It operates throughout the integrated upstream, downstream and downstream oil and gas value chain. It also invests in renewable natural gas, renewable diesel and other forms of alternative and renewable energy. Natural gas and diesel are in themselves non-renewable resources. But natural gas produced from landfill gas from a waste facility and renewable diesel produced from a refinery that uses soybean crude instead of petroleum feedstocks are renewable sources of energy. This means that Chevron could be a relevant player in a low-carbon future – so its long-term investment thesis is no longer just about oil and gas.
Sherwin Williams (SHW -2.66% ) It is a well known residential paint company. But it also manufactures coatings and paints for commercial and industrial clients. Additionally, it sells many of its products under non-Sherwin-Williams brands, making it a much larger company than most people realize. These brands fall under the consumer brands segment. The consumer brands segment and the performance coatings segment combined generated $844.8 million in operating income for 2021, compared to $2.24 billion in operating income from the Sherwin-Williams Corporation’s Brands segment in the Americas.
Sherwin-Williams stock is down 30% from its all-time high as the housing sector shows signs of cooling, affecting demand for its products. But Sherwin Williams is a dividend aristocrat who has gone through economic cycles before. As the leader in its industry, there is reason to believe that Sherwin-Williams can continue to grow its business for decades to come.
health care play
Over the past five years, investors have rarely had the opportunity to buy shares of a robotic surgical system manufacturer intuitive surgical (ISRG -14.34% ) for sale. But with the stock down nearly 24% from its all-time high, now seems like a good time to buy shares of Intuitive Surgical.
The company generates the majority of its revenue from recurring sources, but its growth has also been impressive. Over the past five years, Intuitive Surgical has grown its revenue by 82% and net income by 154%. Intuitive Surgical must play a leading role in driving the healthcare sector forward as professionals increasingly turn to the advantages of robotics and automation.
About 28% of Standard & Poor’s 500 Found in technology stocks. And as technology has become a larger part of the American economy, it has also become a larger part of individuals’ investment portfolios. People want different things from their technology stock. Some want overgrowth. Others want industry leadership and value from stable free cash flows. One of the few companies that has it all Adobe (ADBE -2.11% ).
Adobe is known as the brand behind the Creative Cloud suite of software. In many ways, these apps are essential for modern marketing campaigns, film productions, advertisements, graphic design projects, and all aspects of digital media. Adobe’s growth has declined in recent years, but free cash flow and net income are making the company more profitable than ever. Adobe is a huge growth stock that can remain unstoppable for decades to come. Adobe is down 40% from its all-time high, and it’s an excellent buy for investors looking for a company that shows a balance of growth, free cash flow, and profits.
10 companies you can count on
Investing in equal parts of all 10 stocks on this list gives the investor exposure to different sectors of the economy. It also offers a dividend yield of 1.6% – even though three of the 10 stocks on this list don’t pay a dividend.
Each company on this list is a leader in its own field. All 10 companies are also profitable and generate significant free cash flow that can be used to pay dividends, buy back shares or reinvest in the business. When times get tough, it’s important to have companies you can rely on in your corner. No matter what the economy or market throws at you, there is reason to believe that you can count on the long-term success of all 10 companies on this list.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.