This year’s market selloff has been relentless and shows no signs of slowing down anytime soon. With the S&P 500 and Nasdaq indices each down 20% or more on the year and officially in a bear market, many analysts and traders are referring to this year’s downturn as a “crash.”
Famed investors Michael Burry and Jeremy Grantham have each likened this year’s market decline to the dot-com and housing crashes of 2000 and 2008. They predict more pain is ahead for investors as central banks around the world raise interest rates to bring stubbornly high inflation back down to their 2% targets.
The good news for individual retail investors is that there are several sturdy stocks to be found in the S&P 500 index that can be purchased now at discounted prices and provide predictable future gains.
Here are seven S&P 500 stocks to buy during the current stock market crash.
|BAC||Bank of America||$32.56|
Consumer electronics giant Apple (NASDAQ:AAPL) remains the biggest stock in the S&P 500 index by weighting. With a market capitalization of $2.5 trillion, Apple is the biggest publicly traded company in the U.S.
Prior to Covid-19, Apple’s market cap exceeded $3 trillion, making it the most valuable company in the world. It is difficult to overestimate the size and scope of Apple’s influence over the S&P 500 and other indices. A drop in AAPL stock can pull the entire market lower and send investors sprinting for the exits.
Fortunately, Apple remains a stable, profitable and well-run company under the leadership of Tim Cook. Apple’s core electronics products, such as its iPhones, Apple Watches and MacBook computers, remain staples around the world, and are complemented by a growing number of services such as Apple TV, books and podcasts.
The company’s enduring success is the main reason why AAPL stock is only down 14% this year, proving to be more resilient than many other technology stocks. Over the past five years, Apple’s share price has risen 300%.
There are plenty of reasons for investors to remain excited about electric vehicle maker Tesla (NASDAQ:TSLA).
While the Austin, Texas-based company has faced challenges this year in the form of regulatory investigations, renewed Covid-19 restrictions in China, and a slowdown in consumer demand, it has also achieved multiple successes. These include opening a new manufacturing plant outside Berlin, Germany, and the doubling of its vehicle sales in the U.S. Tesla remains the global market leader in the electric vehicle space, and all other automakers are rushing to catch it.
In terms of the company’s stock, TSLA shares just split for the second time in as many years. On Aug. 24, Tesla split its stock on a 3-for-1 basis. This followed a 5-for-1 stock split back in August 2020. The latest split has brought the price of TSLA stock down to just under $300 a share.
An 18% decline in the share price has also made the stock more affordable for retail investors. Many analysts continue to expect that Tesla will remain the global leader in EV sales for the foreseeable future given that the company allocates 19% of its gross profits to research and development (R&D), enabling it to stay a few steps ahead of its competitors.
Healthcare isn’t really subject to economic cycles. The healthcare sector is more influenced by demographics such as aging populations, as well as government regulations, prescription drug approvals, and technological advancements. As such, healthcare stocks can help a portfolio weather the ups and downs of the economy and market. One such stock is UnitedHealth Group (NYSE:UNH), the largest health insurer in the U.S. and the biggest healthcare company in the world with annual revenues in excess of $285 billion.
One of the 10 largest stocks in the S&P 500 index, UnitedHealth’s stock is up 3% this year. Over the past 12 months, UNH stock has increased 26% despite the broader downturn in equities. The size and resilience of UnitedHealth’s stock is one reason why investors should consider owning it to help them get through a stock market crash.
UnitedHealth also continues to grow and get bigger. The company just secured a key approval in its efforts to acquire healthcare technology firm Change Healthcare (NASDAQ:CHNG) for $8 billion.
While it hasn’t had a significant breakout in over a year, credit card giant Visa (NYSE:V) remains a dependable blue-chip stock. This year, V stock has declined 14%. But over the last five years, Visa’s stock has increased nearly 80%, and it has gained 660% during the past decade. The San Francisco-based payments company has proven that it can withstand economic and market shocks and emerge stronger on the other side.
The company also has a track record of adapting to technological upheaval, which is the case now with a proliferation of competing financial technology (fintech) companies and payment apps such as Block (NYSE:SQ) and SoFi Technologies (NASDAQ:SOFI).
Despite competitive pressures, Visa remains the market leader among established credit card companies. In 2020, nearly half (49%) of American adults had a Visa card in their wallet, compared to 39% who owned a Mastercard and 15% who had an American Express card. Visa is also a cash cow, having generated $16 billion in free cash flow during the past year, giving it the means to withstand any stock market crash.
Big-box retailer Costco (NASDAQ:COST) is a reliable bet in any economy. The Seattle-based company has managed to keep its 117 million cardholders renewing their memberships this year by offering lower prices for products ranging from gasoline and eye glasses to meat and vegetables.
As inflation has pushed consumer prices sharply higher, people continue to turn to Costco for deals. This loyalty on the part of its customers enabled Costco, which reports its earnings on a monthly basis, to announce August sales of $17.55 billion, up 11% from a year earlier. The company’s same-store sales rose 8.7% during the month.
There continues to be speculation that Costco plans to raise its membership fees to help offset the impacts of inflation. This speculation grew louder after competitor Sam’s Club announced that it is raising its basic membership fee to $50 from $45. However, so far, Costco has held its two-tier membership fees steady at $60 and $120, respectively. The company has also kept its popular $1.50 hot dog and soft drink deal intact, which has been cheered by patrons.
Year to date, COST stock is down 13%.
People continue drinking Coca-Cola (NYSE:KO) even when the stock market is crashing. Some people may drink more Coke when they are stressed by sour market conditions. This makes KO stock a steady investment for investors to hold through market cycles.
In fact, Coca-Cola’s stock is so steady that some analysts liken it to a bond. The share price never rises or falls dramatically, but inches higher over time, all the while paying a decent quarterly dividend that yields 2.95%.
This year is a good example of KO stock’s even temper. Year to date, the share price is up a slight 0.7%. In the past five years, the stock has gained 32%. After seeing its sales slow in 2020 due to restaurant and venue closures because of Covid-19, Coca-Cola has come roaring back. In 2021, the Atlanta-based company’s sales rose 8% as lockdowns ended worldwide. Coca-Cola expects sales to grow a further 12% to 13% this year. Earnings per share are forecast to increase 5% to 6% for all of this year.
Bank of America (BAC)
Higher interest rates should help bolster the finances of Bank of America (NYSE:BAC), the second-largest lender in the U.S. In time, higher rates charged on its mortgages, lines of credit, and other loans will surely be exhibited on Bank of America’s balance sheet and in its stock price. But in the near term, the Charlotte, North Carolina-based financial institution is grappling with a slowing consumer loan business, reduced revenues from its trading and deal desks, volatile commodity prices, and growing fears of an economic recession.
Those issues have helped to push BAC stock down 27% this year. But rather than fret, intrepid investors should see the pullback in BAC stock as a buying opportunity. In addition to its diminished share price, Bank of America also has a low price-earnings ratio of 10.36x and pays a dividend that yields 2.7%.
History shows that bank stocks are among the first to recover when the stock market rebounds from a crash, and Bank of America shareholders should benefit from elevated interest rates over a prolonged period.
On the date of publication, Joel Baglole held long positions in AAPL, V and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.