With the markets again trading near all-time highs, it appears that we have entered a permanently bullish phase. Even with the outrageous devastation of the novel coronavirus, Wall Street simply flexed its muscles, producing powerhouse names across a variety of sectors. Further, with the incoming administration of the President-elect Joe Biden, we could enter a renaissance. After all, aren’t Democrats good for stocks to buy?
From a historical standpoint, it’s technically true that left-leaning administrations tend to produce higher returns on the Dow Jones Industrial Average. But does that mean Democrats are better at running the economy? I don’t want to go that far (especially because of the present political vitriol). More diplomatically, I’ll point out that Republicans tend to preside over a stock market crash than their rivals for whatever reason.
But that alone shouldn’t lull investors into complacency because of Biden’s win. Rather, it’s a time to rethink our exposure to stocks to buy and specifically, our vulnerability to certain sectors. In my view, there’s more than enough evidence to suggest that a stock market crash is well within the range of possibilities.
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Primarily, I don’t believe that market valuations are sustainable against the present fundamentals. Either the fundamentals must improve, or the valuations must correct. For instance, the personal saving rate and the velocity of M2 money stock shared a weak inverse correlation between 1959 through 2019. But in this year, the two metrics are virtually at opposite ends, which is a warning sign against a haphazard approach to stocks to buy.
Basically, people are saving discretionary funds like crazy while simultaneously socking away every dollar earned through a job or business. This is net deflationary. And as the circulation of currency approaches zero (which it has been doing for the last several years), you will end up having perfect deflation. Therefore, it’s imperative that you rethink your portfolio with these stocks to buy.
- Costco (NASDAQ:COST)
- Home Depot (NYSE:HD)
- York Water Company (NASDAQ:YORW)
- Smith & Wesson Brands (NASDAQ:SWBI)
- Olin Corporation (NYSE:OLN)
- Shotspotter (NASDAQ:SSTI)
- Wheaton Precious Metals (NYSE:WPM)
- Canaan (NASDAQ:CAN)
Of course, a stock market crash isn’t inevitable. Certainly, I don’t want to be one of those guys that calls eight of the last two recessions. However, with so much desperation — such as a looming eviction crisis — around us, it’s no stretch to assume we could at least incur a correction. Therefore, these resilient and/or relevant stocks to buy might provide some solace in case the worst happens.
Costco (COST)
During the onset of the novel coronavirus pandemic, Costco became a top destination for seemingly everybody. Judging from the lines that rushed into the warehouse retailer’s myriad locations, it was Black Friday every day of the week. And that right there confirmed that if people still wanted their 800 gallons of mayonnaise during a virus outbreak, COST stock is one of the best stocks to buy in case things get rough.
And it seems that things are heading in a darker direction. Mainly, this economic crisis has been devastating for the least educated, which isn’t a surprise. With our digitalized society, you’re going nowhere without at least some college experience (in terms of the typical white-collar career path).
Fortunately, COST stock is insulated from much of the downside due to its affluent consumer base. On average, Costco members pull in a six-figure salary. Presumably, they’ll be the last ones to hurt financially, making the warehouse retailer a solid idea if you foresee a stock market crash.
Home Depot (HD)
Since late August, Home Depot shares have fallen victim to a bearish trend channel, albeit a gentle one as far as volatile patterns go. However, if you’re looking to mitigate your portfolio against a possible downturn, HD stock represents a relatively safe anchor.
In my opinion, it’s always worthwhile to consider Home Depot as one of the stocks to buy, no matter what your end goals. No, it’s probably not going to make you rich. What it does do is provide reliable dividends, even while everything around you is going haywire. Psychologically, there’s meaningful comfort in gaining something rather than a portfolio of crimson.
Second, HD stock has profound relevancy in the face of the unknown. For instance, during the early days of the Covid-19 pandemic, Home Depot kept its doors open as an essential service. That provided confidence while Americans adjusted to the new normal.
And let’s face it — Murphy’s law always strikes when we least expect it. Since demand related to repair work usually can’t wait, HD is perfectly positioned in case we suffer a stock market crash.
York Water Company (YORW)
York Water Company is old. Founded in 1816, it sets all kinds of records, including the longest consecutive streak of dividend payouts. Indeed, when the organization first started delivering passive income to stakeholders, James Madison was President of the United States.
To really put YORW stock into perspective, the Civil War broke out on April 12, 1861. Therefore, it’s likely that at least some of the company’s first shareholders aged out and died prior to this war.
Of course, this means York Water endured several calamitous events, including the Great Depression and both World Wars. True, past results don’t guarantee future performance and all that jazz, but this is a proven company if there ever was one. Thus, you may want to add YORW to your list of stocks to buy in case things go sideways.
Finally, York Water is a public utility firm. During disasters, these are the last organizations to go belly up simply because they’re vital to the national infrastructure. It’s weird to think in such extremes regarding YORW stock but that’s the new normal for you.
Smith & Wesson Brands (SWBI)
Whenever I have discussions about firearms in America, someone invariably brings up Japan. “The Japanese don’t have guns and they don’t have mass criminality problems.” Technically, that’s not true (it’s just that the process is extremely complex and limited), but more importantly, Japan is a homogeneous nation. It’s an apples-to-oranges comparison. Like it or not, diverse populations have diverse ideologies, and those ideologies often clash at the worst time, such as a stock market crash.
Frankly, this dynamic offers terribly cynical but terribly profitable potential for Smith & Wesson Brands and specifically SWBI stock. Don’t believe me? Check out firearms background check data from the Federal Bureau of Investigation, which indicates a 10% jump to 2009 from 2008 sales.
Let me keep it real with you: I get that perhaps most of the increase was due to racists processing Obama becoming POTUS. But gun sales generally increased throughout his two terms, which means they increased through the Great Recession. That’s a lot of processing, if that’s really the case. No matter what, you can see why firearms are some of the best stocks to buy during calamities.
Plus, Americans love that independent spirit. I suppose it’s genetic at this point. So don’t fight the tape — or the Class III body armor — and consider SWBI stock.
Olin Corporation (OLN)
Among the stocks to buy for an equities collapse, Olin Corporation has to represent the biggest disassociation from reality. As you may know, OLN stock has been absolutely killing it over recent sessions. Apparently, that’s because of rising demand for epoxy resin.
According to KeyBanc’s Aleksey Yefremov, “Our previous measured view of OLN’s investment case was based on a weak caustic soda market… [but] eventually, the caustic soda market is likely to rebalance [in 2022], providing a new catalyst.” Uh huh.
No, the real catalyst for OLN stock is of course guns, guns, guns! Or I should say, ammo, ammo, ammo. Thanks to its ownership of the Winchester brand, Olin is primed to advantage a stock market crash should one occur. Because if firearm sales have gone up during the Great Recession, it’s inevitable that ammo sales will see a demand spike. Really, you can’t have one without the other.
Plus, the added benefit for Olin is that while gun nuts may not be in the market for another firearm (unlikely but work with me here), they’re always in the market for ammo. It’s the new precious metal, which is why this is one of the better names for stocks to buy under duress.
Shotspotter (SSTI)
With the tumultuous year that is 2020, it’s perhaps no surprise that Shotspotter has been all over the map. Well, I should check that: it was certainly a surprise to me! Personally, I thought that with the obvious fear and pandemonium around us, SSTI stock would be a no-brainer. And to be fair, shares are well up in the double digits. It’s just that the ride wasn’t a smooth one.
No matter, you’re going to want to watch SSTI stock very carefully. First, with so many guns around, it’s inevitable that a twisted few will use them for nefarious reasons. That’s not a case for the pandemic per say. When you have more guns than people in the nation, there’s bound to be trouble. No amount of background checks will fix that. Some will simply slip through the cracks.
But another reason to lock and load Shotspotter in your portfolio of stocks to buy is crime. Specifically, the relationship between crime and recessions. Almost immediately following the stock market crash of 2008, law enforcement agencies reported a rise in criminality. With this present disaster causing extreme desperation, SSTI is sadly the best cynical play.
Wheaton Precious Metals (WPM)
During periods of uncertainty, investors traditionally sought gold as the ultimate safe-haven asset. There’s a reason why the yellow metal is considered the real fear index. Certainly, with a once-in-a-century pandemic, companies like Wheaton Precious Metals have done very well. Should another stock market crash occur, you’re going to want WPM on your radar.
Yes, WPM stock is of course tied to the gold market. However, it’s a streaming firm, so it’s less exposed to the wildness of commodities, affording investors better cost predictability. You must remember that direct mining companies are corporations first, meaning that internal problems unrelated to the gold market could impact their valuations. With Wheaton, you’re essentially connected to high-quality and reliable streams.
But a bigger picture reason to consider WPM stock is that the present economic challenges may worsen over time. Sure, the unemployment rate is down. However, an employee survey conducted by Skynova.com revealed that “18% of employees indicated they’d been demoted as a part of cost-saving precautions taken by their companies … demotions were most common among senior employees (36%).”
In other words, there’s hidden stress among the supposedly robust white-collar community that could burst in the worst way possible. So it’s cynical but keep Wheaton on your target list of stocks to buy.
Canaan (CAN)
I’m not going to talk nonsense, cryptocurrency mining specialist Canaan is one of the riskiest investments for stocks to buy under any circumstance. I’ll be upfront: I’m not entirely sure what a stock market crash will do to Canaan’s valuation. But there is at least a possibility that CAN stock can rise above the muck.
Mainly, I’m stating this because of the extreme demand for bitcoin (CCC:BTC-USD) and alternative cryptocurrencies (altcoins). As you’ve undoubtedly heard, BTC blew through the $20,000 level and jumped above $23,000 before settling in the high $22,000 range at time of writing. To me, this signals that crypto assets are on their next journey higher.
And why wouldn’t they be? For one thing, stocks to buy are wonderful but they’re awfully inconvenient, I’ve got to say. With cryptos, you can buy and trade whenever you want. Further, this on-demand investing phenomenon really speaks to the convenience factor that millennials and Generation Z crave.
Still, you’ve got to be aware that many analysts have openly questioned Canaan’s financials. Certainly, the blockchain arena has some unsavory characters. So if you do invest, do so very carefully and only with money you can afford to lose.
On the date of publication, Josh Enomoto held a long position in gold and bitcoin.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
