The turbulent times continue. “Volatility” is the watch word in stock markets these days as the gyrations seen in January continue through February earnings season.
Facebook parent company Meta Platforms (NASDAQ:FB) provides disappointing guidance and the Dow Jones Industrial Average falls more than 500 points in a single day. E-commerce giant Amazon (NASDAQ:AMZN) beats on its earnings, and the market recovers the next.
Tech stocks that were all the rage during the pandemic continue to get hammered as investors rotate into cheaper cyclical securities. It all adds up to a wild ride that shows no signs of abating anytime soon.
Yet there are some stocks that are sailing smoothly through the gale force winds and tidal waves. Namely, that stocks are structured to perform well no matter what the broader market does. Here are three of the best bear market stocks to buy now to prepare for a bumpy ride ahead.
Bear Market Stocks to Buy Now: Berkshire Hathaway (BRK.B)
The holding company founded and run by Warren Buffett has proven to be a rock solid investment in good times and bad. Case in point, during the volatility that has rocked stock markets so far this year, the price of the B shares of Berkshire Hathaway, BRK.B, stock have risen 5% to $316.72 a share. That gain compares to a year-to-date loss for the S&P 500 index of 6%.
Buffett’s secret to success? A long-term buy-and-hold strategy that focuses on buying quality, well-run companies and sidestepping the latest trends and fashions on Wall Street. It’s a philosophy that has kept Berkshire Hathaway’s stock and Buffett’s track record ahead of the pack for more than 50 years.
Two recent developments illustrate how reliable and smart Berkshire Hathaway is as an investment in turbulent times. First, it was recently revealed that BRK.B stock’s gains since the onset of the pandemic now match the gains of Cathie Wood’s flagship Ark Innovation ETF (NYSEARCA:ARKK) whose holdings consist of pandemic high flyers such as Teladoc Health (NYSE:TDOC) and Zoom Video Communications (NASDAQ:ZM).
Buffett’s main holdings? They include Coca-Cola and American Express (NYSE:AXP), both of which he’s owned for more than 30 years. And while Wood’s has been furiously buying more shares of her holdings as their prices collapse, Buffett hasn’t done much of anything to his portfolio in the last year.
Secondly, Berkshire Hathaway has just surpassed Facebook parent company Meta Platforms in terms of market capitalization. Steady gains in Berkshire’s portfolio have pushed the holding company’s market capitalization above $700 billion, overtaking Meta Platforms for the number six spot on the list of most valuable U.S. public companies.
Following disappointing earnings and guidance, FB stock cratered on Feb. 3, declining 25% in a single day. Having lost more than $237 billion of market cap, it was the biggest single day drop in value in the history of the U.S. stock market. And now Berkshire Hathaway is ahead of Meta Platforms, proving once again that Buffett’s approach wins out whether the stock market is up or down.
Coca-Cola (KO)
Coca-Cola hasn’t changed a lot in the 130 years since it was founded. The Atlanta-based company still produces the same sugary elixir today that it always has. For this reason, Coca-Cola has been dismissed by younger investors as boring and even stagnant. However, that’s not a bad thing in turbulent times.
KO stock tends to plod along whether the broader market is rising or plunging, delivering decent returns to investors and steadily increasing its annual dividend, which the company has raised for 59 consecutive years.
So far in 2022, Coke’s stock is up a modest 3%. Not a huge gain, but not a loss either. This steady-as-it-goes performance has led some investors to criticize Coca-Cola’s shares, saying they behave more like a bond than a stock.
Yet it is KO stock’s even-keeled performance and annual dividend yield of 2.75% that has made it a core holding of Warren Buffett’s portfolio. Buffett currently owns 400 million shares of Coca-Cola, and has held that amount for more than 30 years.
Also, Coca-Cola seems largely immune to economic headwinds and investor trends. In good times or bad, people drink Coca-Cola. This helps to account for the fact that, through the first three quarters of last year, Coke increased its sales by 20% from the same period a year earlier and its operating profit grew by 30%.
Steady, reliable, profitable. Boring indeed.
Bear Market Stocks to Buy Now: Proctor & Gamble (PG)
Another old school though equally reliable stock is Proctor & Gamble. The Cincinnati, Ohio-based company that manufacturers consumer goods ranging from Tide laundry detergent to Bounty paper towels and Crest toothpaste seems to navigate well through market revolts and upheavals.
Year-to-date, PG stock is basically flat at around $160 a share, down a slight 0.6%. However, over the past six months, the stock has gained 14% and is up 26% over the last year. While once high-flying tech stocks crash and burn, Proctor & Gamble moves steadily higher as consumers continue to rely on its products in their daily lives.
The sheer diversity of Proctor & Gamble’s product line is a core strength of the company. And there are very few products it makes, from toilet paper to moisturizing cream, that people can live without.
The company has forecast sales growth for this year of between 4% and 5%. While that might seem tepid compared to the sales growth at high-tech companies, it is quite strong for a legacy consumer goods business that has been in operation for 185 years.
In addition to its steady growth and strong share price appreciation, Proctor & Gamble also pays a decent annual dividend yield of 2.15%, or $0.87 a share per quarter.
Not flashy or exciting, but beneficial in the long run.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Joel Baglole has been a business journalist for 20 years. He spent five years as a staff reporter at The Wall Street Journal, and has also written for The Washington Post and Toronto Star newspapers, as well as financial websites such as The Motley Fool and Investopedia.
