Volatility has been plentiful in recent months, leading some to conclude we’re on the verge of another bear market. A pessimistic as things may seem, the truth is that the S&P 500 is still near all-time highs, while the tech-heavy Nasdaq is down just 5%. Since it takes a 20% decline from recent highs before we enter bear market territory, we still have a long way to go…
That said, it pays to be prepared. One way to do that is having a shopping list on hand for the stock market crash, ready to press the buy button. When the next bear market hits, I’ll be looking for resilient stocks that can stand the test of time. Buying a company with a virtually unshakable business, an industry leader with a dedicated fan base, or one with a vault chock-full of intellectual property would all be smart moves.
Let’s look at three companies that fit these criteria and why they have a prominent place on my buy list.
A love affair with coffee
Americans love their coffee. A whopping 62% of U.S. adults drink coffee every day, and the average coffee drinker downs more than three cups per day. One of the biggest beneficiaries of this love affair is Starbucks (NASDAQ:SBUX).
The coffee purveyor was the canary in the coal mine and was among the first stocks to take in on the chin at the start of the pandemic. During a six-week period between February and March 2020, Starbucks lost more than one-third of its value. Yet even the specter of the pandemic couldn’t keep the company down, which quickly pivoted to leverage its mobile app to become a hub for takeout and delivery orders to keep Starbucks afloat. The company slashed discretionary spending, suspended share repurchases, and deferred capital expenditures.
Now, just a year later, Starbucks is enjoying a full-scale recovery of its business in the U.S. and is better positioned to thrive as the world begins to reopen. Net revenue grew 11% in the second quarter, driven by a 15% jump in global comparable-store sales. While transactions edged lower, there was a 19% increase in the average ticket. At the same time, net income and earnings per share doubled, though that was partly the result of easier comps. The Starbucks Rewards loyalty program continues to attract converts, up 18% year over year to nearly 23 million.
This is the type of resilience I want to see in my investments. Coffee lovers simply aren’t going to give up their daily fix of caffeine, and it’s little luxuries like Starbucks that will keep people coming, even unto the next bear market.
The Apple of my eye
Another company that showed an unexpected amount of resilience during the most recent bear market was Apple (NASDAQ:AAPL). Many market prognosticators were forecasting the worst for the iPhone maker, but the company held up remarkably well.
Like Starbucks, Apple was forced to close various retail locations as the pandemic ramped up, until it eventually had to shutter them all. There were a number of staggered store openings and closings, as Apple followed state and local health guidelines to inform its decisions. It wasn’t until this March that the company was finally able to reopen all its retail locations, after nearly a year of scattered closures.
Apple certainly faced headwinds, but at the worst point during the bear market, the company still generated growth. Consumers turned to e-commerce in droves, using its online store to get their fix of Apple products. Revenue during its fiscal 2020 second quarter edged 1% higher — a remarkable feat for a company that generated more than $58 billion in sales. Earnings per share also crept higher, climbing…
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