Turbulent Times: 3 Stocks That Could Outperform in a Market Crash


  • As market volatility surges, dial down your portfolio risk with these crash-resistant stocks.
  • Kimberly-Clark (KMB): This personal care and consumer tissue products company offers earnings stability in all economic environments.
  • Progressive (PGR): Auto-insurance is mandatory, and this auto-insurer is growing market share through innovation.
  • General Mills (GIS): This cereal company has a 0.12 beta, ensuring limited volatility during market turmoil.
Crash-Resistant Stocks - Turbulent Times: 3 Stocks That Could Outperform in a Market Crash

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After six months of calm, market volatility is increasing. Concerns about inflation, the upcoming election and seasonal weakness pose a headwind for stocks. To prepare for a surge in volatility, it’s advisable to trim your growth stock winners and add some crash-resistant stocks.

Savvy investors have many reasons to seek defensive exposure. Due to persistent inflation rates, investors are bracing for higher rates, which could negatively impact risk assets like stocks. Moreover, with the U.S. elections beckoning in November, the campaign season could heighten volatility.

Another market risk is seasonal weakness in the upcoming months. The sell in May and go away phenomenon could have a huge impact this year. We could be due for some weakness after a robust five-month performance that began in November 2023.

The following crash-resistant stocks have a beta below 0.5, meaning they are half as volatile as the market. They represent stable businesses with forward earnings growth above 5% and returns on equity above 20%. With low betas and forward price-to-earnings below 20, these stocks could outperform.

Kimberly-Clark (KMB)

Kimberly Clark (KMB) sign, positioned outside the world headquarters’ main entrance.
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We need essential personal care products and consumer tissue products in any environment. That’s why Kimberly-Clark (NYSE:KMB) is one of the crash-resistant stocks. Furthermore, it trades at a reasonable valuation of 19 times forward earnings.

Kimberly-Clark sells essential personal care products in over 175 countries. These products range from Huggies diapers for baby care to Kotex for feminine care. Indeed, the company’s products are essential to a quarter of the world’s population.

Amidst its efforts to optimize its cost structure, the parent company of Cottonelle delivered strong Q1 2024 results. Although net sales decreased 1% to $5.1 billion, organic sales grew 6%.

Profitability was a highlight, with gross margins improving 390 basis points to 37.1% due to productivity gains. Operating profit surged from $787 million in the prior year quarter to $853 million, driving a 20% year-over-year (YOY) growth in adjusted earnings per share to $2.01.

Management’s outlook for 2024 calls for mid-single-digit growth in organic net sales. Also, they raised their adjusted EPS growth from a previous forecast of high-single-digit growth to a low teens rate. Consumer tissue and personal care products are essentials that guarantee earnings stability for Kimberly-Clark. And with productivity improvements boosting earnings, it’s one of the best crash-resistant stocks to buy.

Progressive (PGR)

A white car with the Progressive logo written across the doors in big blue letters
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This leading U.S. auto insurer is already up 30% year-to-date (YTD) as it continues to increase insurance premiums. From an investment standpoint, Progressive (NYSE:PGR) is one of the best crash-resistant stocks to buy.

First, it’s less volatile than the market due to its beta of 0.35. This means that even in the event of a correction, it should outperform the market. Second, the fundamental outlook for the auto insurance industry is positive. The fact that auto insurance is mandatory for car owners helps. Plus, after higher costs hampered profits over the last two years, auto insurers are now increasing premiums.

Industry-wise, Progressive has been in great shape due to its innovation. For instance, its early adoption of telematics lowered premiums relative to peers while driving underwriting profitability. As a result, it has consistently grown its market share against peers.

Looking further out, the insurer is well-positioned for growth. In 2023, Progressive had a 15.3% market share in the U.S. auto insurance market. Morgan Stanley’s analyst Bob Jian Huang expects it to grow its share to over 18% by 2028 due to its strong competitive position, innovation and market shift opportunities. It is one of the ideal crash-resistant stocks to weather volatility in a choppy market.

General Mills (GIS)

General Mills Cereal, GIS stock
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General Mills (NYSE:GIS) dominates the breakfast table and is a leader in the $10 billion cereals market. Its portfolio of strong brands, such as Cheerios and Nature Valley, has positioned the company for continued category leadership and deep retailer relationships.

Besides cereal, one of the best crash-resistant stocks has a growing pet business. Its pet food business, Blue Buffalo, accounts for 12% of revenues. The segment sells wet pet food, pet treats and dry pet food. This business has been a solid driver of organic sales growth.

Additionally, General Mills has taken strategic steps to accelerate its pet business and access other global markets. On April 30, it announced the acquisition of Edgard & Cooper, one of Europe’s fastest-growing pet food companies. The deal adds high-quality pet brands and distribution capabilities across 13 European markets.

The strength in cereal makes General Mills one of the best crash-resistant stocks. Furthermore, the pet business will drive revenue growth over the long term as it becomes a larger component of total revenues. At 16 times forward earnings, this consumer staple is a bargain. Lastly, its low beta of 0.12 minimizes volatility, ensuring downside protection.

On the date of publication, Charles Munyi did not hold (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.

Charles Munyi has extensive writing experience in various industries, including personal finance, insurance, technology, wealth management and stock investing. He has written for a wide variety of financial websites including Benzinga, The Balance and Investopedia.

Article printed from InvestorPlace Media, https://investorplace.com/2024/05/turbulent-times-3-stocks-that-could-outperform-in-a-market-crash/.

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