Ordinarily, a blisteringly hot jobs report wouldn’t inspire discussions about stocks to buy before crash. Essentially, the latest employment readout suggested that more money chases after fewer goods. On the surface, that’s inflationary, not deflationary as a equities sector crash would imply. Still, the devil may be in the details.
At the most basic level, a hot jobs figure represented exactly what the Federal Reserve didn’t want to hear. Sure, it may decide to pause its interest rate hike campaign regardless. However, if circumstances continue to accelerate like they have, the Fed may have little choice but to go aggressively hawkish. Of course, such a policy would risk a deflationary outcome, which may incentivize secure stocks during market crash.
Finally, the jobs report wasn’t completely good news, which printed fewer hours worked per week and hourly wage growth dipping. Combined with consumers spending less, a downturn isn’t out of the question. Below are ideas to consider for safe investments during market volatility.
|AAP||Advance Auto Parts||$65.59|
|CVR||Chicago Rivet & Machine||$23.98|
|TNDM||Tandem Diabetes Care||$24.25|
Five Below (FIVE)
Labeled as a leading high-growth value retailer offering trend-right, high-quality products for tweens, teens and beyond, Five Below (NASDAQ:FIVE) arguably cuts a nice niche in the discount retailer space. Featuring mostly products that are priced up to $5, a select few items range between $6 to $25. Therefore, the company tends to also attract customers seeking bargains as a hobby as opposed to out of desperation.
Since the start of the year, FIVE gained over 6% of its equity value. Financially, Five Below delivered overall solid results for its fiscal first quarter of 2023. Although its revenue haul of $726.25 million missed the consensus target by $1.96 million, comparable sales increased by 2.7% on a year-over-year basis. Importantly, management delivered a strong Q2 sales outlook of between $755 million to $765 million.
However, on the fundamental side, consumers haven’t quite started trading down from premium-level retailers en masse, meaning that investors will need to exercise patience with FIVE. Still, it may be one of the stocks to buy before crash because of burgeoning relevancies. Finally, analysts peg FIVE as a consensus strong buy. Their average price target lands at $219.13, implying 20% upside potential.
Dollar Tree (DLTR)
Admittedly ranking as one of the more disappointing stocks to buy before crash, Dollar Tree (NASDAQ:DLTR) should make sense as a mitigatory idea. After all, should the economy fade, consumers will almost invariably tighten their belts. Of course, this dynamic yields a deflationary impact on the discretionary retail space. In addition, people will naturally trade down to cheaper alternatives of commonly purchased goods.
On paper, this dynamic benefits DLTR, theoretically making it one of the secure stocks during market crash. Unfortunately, it’s DLTR that’s doing most of the crashing. In the trailing one-month period, the security stumbled more than 12%. So far this year, Dollar Tree stock lost almost 5% of its market value.
Part of the problem is that consumers are shifting away from discretionary items to consumable goods. This product category features lower margins, applying pressure on entities like Dollar Tree. At the same time, a broader slowdown could spark significant desperation. For the patient, DLTR could be one of the stocks resistant to market crash.
For now, analysts peg DLTR as a consensus moderate buy. Their average price target comes in at $152.38, implying 14% upside potential.
A utility play for stocks to buy before crash, Sempra (NYSE:SRE) focuses on becoming North America’s premiere energy infrastructure company. With more than $60 billion in total assets at the end of 2019, the San Diego, California-based company is the utility holding firm with the largest U.S. customer base, according to its corporate profile. Since the Jan. opener, SRE slipped 6%.
As with other utility trades, Sempra doesn’t immediately strike you as one of the safe investments during market volatility. For example, the company doesn’t exactly offer the most stable balance sheet. Its Altman Z-Score also sits at 1.08, indicating distress. However, the company benefits from a natural monopoly. Basically, the barrier to entry for utility providers is so steep that would-be competitors don’t even try. Therefore, Sempra benefits from consistent profitability. Let’s face it, no one’s going to usurp this Southern Californian stalwart.
In closing, analysts peg SRE as a consensus moderate buy. Their average price target hits $170.78, implying over 18% upside potential.
Because insurance companies have no qualms about competing with each other in the most lucrative markets, Progressive (NYSE:PGR) doesn’t exactly own a natural monopoly. However, it enjoys the next best thing: a hostage or captive audience. As a top player in the automotive insurance industry, Progressive benefits from the fact that most states in the Union require at least liability insurance.
True, Progressive again has competition so it’s not a monopolistic enterprise. However, thanks to its brand power, it enjoys a high volume of recurring revenue and consistent profitability. Not surprisingly, Progressive does not command the best financial metrics among stocks to buy before crash. Its balance sheet seems wobbly and PGR rates as overvalued against trailing and forward earnings.
However, its three-year revenue growth rate pings at 8.3%, above 67% of its peers. And it prints 10 years of profitability over the past decade. Generally speaking, PGR qualifies as one of the best stocks during market crash because virtually all Americans require auto insurance. That’s the case whether a recession materializes or not. To be fair, analysts view PGR as a hold. However, their average price target clocks in at $146.08, implying nearly 13% upside potential.
Advance Auto Parts (AAP)
Diving into the riskiest segment of stocks to buy before crash, Advance Auto Parts (NYSE:AAP) initially seems extremely suspect. As a leading automotive aftermarket parts provider that serves both professional installer and do-it-yourself customers, Advance Auto should be relevant if economic troubles materialize. However, the only troubles so far center just on the company. Since the Jan. opener, AAP hemorrhaged over 55% of its equity value.
Last week, CNBC reported that Advance Auto plunged due to dismal results for its first quarter of 2023 earnings report. Specifically, the company posted earnings per share of just 72 cents. In sharp contrast, analysts expected EPS to hit $2.57. Further, its Q1 sales of $3.42 billion just missed expectations calling for $3.43 billion. Later, a severe full-year profit downgrade sent AAP into a nosedive.
With all that said, the fundamental narrative remains relevant: under an economic challenge, let alone a full-blown crisis, people will keep their vehicles running for as long as possible. Therefore, AAP could be trading at a hefty discount. Sure, analysts remain very pensive about the opportunity. But if you’re looking for secure stocks during a market crash, this one is a great bet.
Chicago Rivet & Machine (CVR)
Broadly speaking, boring but relevant enterprises such as Chicago Rivet & Machine (NYSEAMERICAN:CVR) usually make for solid ideas for stocks to buy before crash. Per its public profile, Chicago Rivet produces and sells rivets, cold-formed fasteners and parts, screw machine products, automatic rivet setting machines, automatic assembly equipment and parts and tools for such machines. It’s not groundbreaking stuff. However, CVR represents (literally) the nuts and bolts of the economy.
Despite the relevance, CVR fell more than 16% since the Jan. opener. In the past 365 days, it slipped almost 14%. In its most recent Q1 earnings report, net sales came out to $8.73 million, comparing unfavorably to the $9.2 million posted one year ago. Worryingly, fastener segment sales for non-automotive customers fell 12.3% year-over-year.
On the positive side, fastener sales to the automotive industry increased 2.1% YOY. As alluded to earlier, a recession might hurt auto sales. On the other hand, demand wealthier customers apparently remains strong, which could benefit CVR. Plus, the company’s boring but necessary products should serve it well across varying circumstances. Thus, it could be one of the safe investments during market volatility.
Tandem Diabetes Care (TNDM)
Easily the riskiest entry on this list of stocks to buy before crash, Tandem Diabetes Care (NASDAQ:TNDM) is a medical device company dedicated to improving the lives of people with diabetes through relentless innovation and revolutionary customer experience. Per its public profile, Tandem takes an innovative, user-centric approach to the design, development and commercialization of products for people with diabetes who use insulin.
On paper, Tandem seems an incredibly relevant idea for stocks resistant to market crash. After all, health conditions don’t evaporate with the appearance of recessionary pressures. Unfortunately, the market takes a dim view regarding TNDM. Since the January opener, shares tumbled more than 44%. In the trailing one-year period, they’re down 61%.
So, why consider TNDM one of the best stocks during market crash? For one thing, it’s already at a low point. Much more importantly, the global diabetes devices market offers a lucrative arena. Valued at $26.7 billion in 2021, analysts project that the segment could expand at a compound annual growth rate (CAGR) of 8.2% from 2022 to 2030. At the forecast culmination, the sector could see revenue of $54.16 billion. That’s no guarantee, to be clear. Still, the adventurous types might be intrigued.
On the date of publication, Josh Enomoto 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.