3 More Stocks to Buy If the Market Crashes

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Given that all signs point to a market dominated by bears, with the technicals supporting this supposition, intelligent investors should already be putting together a shopping list of stocks to buy.

3 More Stocks to Buy If the Market Crashes

Source: ©iStock.com/Morrison1977

Now, that doesn’t mean to use current prices as your decision-making jumping point, but rather to picture prices that are significantly lower from here, which I expect they will be.

Of course, that’s a lofty task. We don’t want to jump into anything too speculative, but rather stick with stocks that could function as core positions in a long-term diversified portfolio AND that you can get cheap.

There are many to choose from, but my mind steers toward equities that have been outrageously overpriced and may finally come down to earth.

Market Crash Stocks to Buy: Southwest Airlines Co (LUV)

Market Crash Stocks to Buy: Southwest Airlines Co (LUV)Southwest Airlines (LUV) is the first of my stocks to buy. I am not a fan of airlines in general, although the recent run-up has made them more attractive thanks to wholesale reconfiguring of business models.

Airlines are more profitable than ever, and will continue to post huge profits thanks to lower oil prices and a travel and leisure sector that refuses to quit even in the midst of a weak economy.

LUV stock is in great shape today, having just reported terrific fiscal year 2015 earnings. Revenue was up 7.5%, passenger revenues went up 3.3%, and the most recent quarter it delivered net income of $536 million. It generated free cash flow of $1.1 billion during the year.

The stock is at $35 right now, and in the past year it actually hit a low of $31. I think that alone is a solid entry point. If you can get in even lower, so much the better.

Market Crash Stocks to Buy: Home Depot Inc (HD)

Market Crash Stocks to Buy: Home Depot Inc (HD)Home Depot (HD) is another solid stock to buy when the market takes a turn for the worse.

Like everyone else, I’m concerned about a possible recession, but HD stock has proven its resilience time and time again, regardless of economic cycles. HD made it through the housing crisis and built off of its lows, and if it can withstand a housing crisis of all things, it can withstand anything.

Springtime is home improvement season, and HD stock is obviously expecting a good year because it said it would hire an additional 80,000 workers for the season. Eighty thousand! That’s more than 20% of its usual workforce.

The problem is that, right now, HD stock trades at 22 times its trailing twelve month earnings. That’s rich for a company that has five-year earnings estimates of 14.4% plus a 2% yield.

If you can get HD stock in the low $90s, don’t hesitate.

Market Crash Stocks to Buy: Berkshire Hathaway Inc. (BRK.B)

Market Crash Stocks to Buy: Berkshire Hathaway Inc. (BRK.B)The last in my groups of stocks to buy is none other than the legendary Berkshire Hathaway (BRK.B). Some might say to buy BRK stock at any price, and that’s not a terrible idea. But why do that if you can get it cheaper?

Regardless of the state of the economy, you can count on BRK stock thanks to its diversification. It’s like owning a mutual fund, with a solid core insurance company driving the train. Insurance always does well in the long run.

Historically, whenever the market discounts BRK stock, it comes roaring back. It hit a low of $51 after the financial crisis, before tripling and hitting $150 in late 2014. BRK stock is in a downtrend right now (along with most other stocks), so the trick will be timing an entry point.

I think the thing to do, with the stock at $126, is to not get too trigger-happy. Instead, scale in pieces. That means buy at $118 and accumulate more shares every time BRK.B stock sees a $4 to 5 drop.

As of this writing, Lawrence Meyers did not hold a position in any of the aforementioned securities. 


Article printed from InvestorPlace Media, https://investorplace.com/2016/02/stocks-to-buy-luv-hd-brk-a-brk-b/.

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