The stock market is a marketplace that offers excitement, business opportunities, plenty of news and a lot of risk. It can go up, sideways and down. We are now near record highs for all major U.S. stock indices. And while a stock market crash could occur, like the one back in March 2020 due to the novel coronavirus, I believe the following five stocks to buy are surefire stocks with great potential. You can hold them in any weather for the long-term and capital gains.
The long-term picture is bright for these stocks thanks to stable product revenue, growth and dividends which provide well-adjusted risk-return potential.
By surefire stocks I mean stocks that are not speculative bets, but rather companies that are leaders in their business sectors, have been around for many years, and have institutional support.
These five stocks are highly qualitative, leaders and have shown that their business models are solid. In a year where speculation may be present and meme stocks come and go, these are stocks that fit well in the set-it-and-forget-it investing style. And any stock market crash should be another buying opportunity.
My picks are:
- Johnson & Johnson (NYSE:JNJ)
- Walmart (NYSE:WMT)
- Pfizer (NYSE:PFE)
- Apple (NASDAQ:AAPL)
- The Coca-Cola Company (NYSE:KO)
Stocks for a Market Crash: Johnson & Johnson (JNJ)
Johnson & Johnson was founded in 1886 and is a leader in the healthcare field worldwide. It has three core business activities — consumer, pharmaceutical and medical devices. This means there is plenty of diversification for revenues and growth as well.
Johnson & Johnson has a market capitalization of $427 billion. When the stock market crashed last year in March, JNJ stock fell to about $120 per share. It now has a current price of about $162 per share, or an increase of 35% in less than a year.
The company is preparing its Covid-19 vaccine, which is considered a crucial income factor to monitor. The three-year average growth for revenue according to Morningstar is 2.6%. Stable and consistent.
The stock has a Beta (5Y Monthly) of 0.73, meaning that in case of any stock market crash in theory it should decline less than the broader market. And it has a forward dividend and yield of $4.04 and 2.5% respectively.
Walmart operates in the consumer defensive sector, which, as its name implies, is a defensive stock for turbulent times. Its beta is only 0.47, offering, in theory, plenty of safety in any future crash. A Beta of less than 1.0 makes stocks defensive, as they move at a lower percentage compared to the broader stock market such as S&P 500, either up or down.
Walmart is a retail leader and has a long history as it was founded in 1945. Looking at the established trend history Walmart has three-year average revenue growth of 2.55%. The forward dividend and yield are $2.20 and 1.6% respectively.
The one-year return of the stock, according to MarketWatch, is 20.7%. This shows that there is both safety and plenty of potential for capital gains.
Pfizer is a stock that flew under my radar for quite some time. And now, its Covid-19 vaccine is not just the main reason for being optimistic. If variants of the coronavirus crop up in the future, further vaccination may be needed. And this should be positive for Pfizer, as it has an official agreement for providing vaccines worldwide, for example in the EU.
Pfizer is a leader in healthcare products globally. It has a relatively low beta of 0.67, and a very attractive forward dividend and yield of $1.56 and 4.6% respectively.
At the stock market crash last year, the stock price fell to below $28 per share, and today it trades at around $34 per share having gains of about 21%. And while the three-year average growth for revenue growth is -0.68%, where Pfizer shines is profitability. It boasted a net margin of 31.44% for 2019.
I cannot find a better argument in favor of Apple than the following simple, yet powerful one. There are Android smartphones, and then there is the iPhone. If you want to switch away from Android then iPhone is your next choice. And while Apple sells not just smartphones, iPhone is probably the product that is most well-known for.
Apple stock has many things to like — profitability, dominant position in the tech space, innovation, and incredible loyal clientele, and of course a very strong balance sheet and strong financial performance.
It is the only stock in this list with a high beta of 1.27 according to Yahoo! Finance. This means that it could be more vulnerable to a potential stock market crash than the others on this list. But Apple is a stock to hold for the long-term. With consistent stock buybacks, plenty of cash to return as an extra dividend, the ability to engage in multiple merger & acquisition deals, and with plans to enter soon in the electric vehicles business, Apple is for me a stock to buy and forget.
The prospects for its business are great, and any selloff should be an ideal time to accumulate some of its shares. The forward dividend and yield of 82 cents and 0.65% respectively are not impressive. But I expect them to increase.
Apple shines also at profitability. It has a consistent net margin of above 20% for the past consecutive five years, ranging between 20.91%-22.41%, and positive and growing free cash flows, plus a three-year average revenue growth of 6.2%. If you are looking for high qualitative stocks and market leaders, then a stock market crash can only make Apple stock more attractive and compensate for its risk with potential capital gains and dividend income.
With a one-year return of 69.25%, I bet that many institutional investors are monitoring the stock and are ready to provide support in a future stock market crash. And not for speculation, but for buying a great stock at a great price.
The Coca-Cola Company (KO)
The company was founded in 1886, and for being around so long, it must be doing something great. It’s a leader for beverages worldwide and an iconic stock. It is suitable for novice and sophisticated investors, and is the textbook definition of a mature company.
The five-year sales growth is not that inspiring, as revenue hasn’t breached $40 billion since 2016. Ever since, revenue is in the range of $33 billion to $37.2 billion. And in March 2020 when almost every stock crashed, the KO stock price was about $38. Today the stock price is about $50.44, a gain of 32%.
Add the forward dividend and yield of $1.68 and 3.2% respectively, and total gains are even bigger. The post-Covid era should be positive for sales of the Coca-Cola Company. And if the Olympics are to occur in 2021, then odds are that sales of Coca-Cola should increase with the return of big sports events.
On the date of publication, Stavros Georgiadis, CFA, did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Stavros Georgiadis is a CFA charter holder, an Equity Research Analyst, and an Economist. He focuses on U.S. stocks and has his own stock market blog at thestockmarketontheinternet.com/. He has written in the past various articles for other publications and can be reached on Twitter and on LinkedIn.