Key Points

  • Valuation measures indicate trouble for S&P 500 ahead.
  • Crashes and corrections represent opportunities to buy outstanding businesses at a discount.
  • We review 5 stocks to buy in a market crash.

A ten percent drop in market value – or more – is a long time coming, according to history. Moreover, history teaches us that rebounds from a bottom are rarely smooth. In each of the previous eight bear markets leading up to the coronavirus-related recession, there was either one or two double-digit percentage losses within three years of the bottom.

But there’s also good news: Crashes provide long-term investors with opportunities. We’ve got five great stocks to buy in a market crash, each worth holding if this latest volatility leads to a long-overdue collapse.

CrowdStrike Holdings

What remains unchanged when the market falls? A business’ need for cybersecurity. That’s why, in my opinion, any reduction on CrowdStrike Holdings (NASDAQ:CRWD) is a blessing.

The CrowdStrike cloud-native Falcon platform is its star. It oversees around 6 trillion events each week, with artificial intelligence being used to improve the detection and response of threats over time. Because Falcon is based in the cloud, it’s often quicker and more cost-effective than on-premises security solutions.

Customers adore the CrowdStrike product, as demonstrated by its operating results. It has a 98 percent retention rate and 64 percent of clients bought four or more cloud-module subscriptions in the recent quarter.

For some perspective, just 9% of its clients had four or more cloud-module subscriptions. CrowdStrike is a no-brainer purchase on account of weakness.

Home Depot

If you prefer to invest in name-brand equities, a stock market crash or significant downturn is typically an excellent moment to fill your shopping cart with shares of do-it-yourself home improvement chain Home Depot (NYSE:HD).

The great thing about Home Depot is that it can operate in two different ways. If the American economy is operating at peak efficiency, commercial clients and contractors will most likely buy more wares.

When the economy sours, we’ve seen homeowners take on a more prominent role in Home Depot remodels and projects. For the most part, the firm is surprisingly well-protected against almost all economic scenarios.

Investors should also consider that Home Depot has made significant investments in technology. While bricks and mortar remains the primary sales engine, Home Depot has witnessed a substantial increase in digital purchases over the previous several years. This seamless blending of the physical and virtual world should aid it in weathering any short-term market volatility.

Humble & Fume Inc.

For the investors seeking growth stocks even in a downturn, we’re eyeing Humble & Fume Inc. (CNSX:HMBL.CN). Normalization of U.S. cannabis is coming. If the SAFE Banking act is passed, the industry would be a step closer towards cannabis legalization. If that does happen, it would be excellent news for Humble & Fume Inc., which has formed agreements to vastly increase distribution in the United States when permitted by law.

SAFE Banking aside, Humble & Fume is not stopping. The company is providing accessories to the retail market as a chance to channel-build on the road to legalization. Moreover, last November, Humble & Fume completed a US$8 million private placement. Through that deal, Johnson Brothers, a Top 5 wine, spirits and beer distributor in the United States, acquired the right to buy Humble once cannabis has been federally legalized.

And, its debt-free, cash position of over $6 million will help the company survive a market downturn. We think it’s a cheap stock to buy in a market crash.

AGNC Investment Corp.

And of course, something for the dividend-earning investors out there. If the market downturns or corrects, mortgage real estate investment trust (REIT) AGNC Investment Corp. (NASDAQ:AGNC) and its 9% dividend yield would be attractive targets.

Mortgage REITs are firms that borrow money at cheaper short-term rates to purchase assets with greater long-term yields, like mortgage-backed securities. The net interest margin is the difference between their asset yields minus their borrowing rate.

Typically, during the early phases of an economic recovery, the bond yield curve tends to steepen. When that happens, mortgage REITs frequently see their net interest margin expand.

AGNC Investment also has a large allocation to agency securities, which are government-backed bonds in the case of bankruptcy. Also, with this extra safeguard, AGNC may use leverage more effectively to improve its earnings.

Bristol Myers Squibb

When stock market volatility rises, investing in defensive sectors and industries is frequently a good idea. That is why pharma stock Bristol Myers Squibb (NYSE:BMY) would be an excellent purchase.

Bristol Myers Squibb made quite a splash in 2019 when it acquired cancer and immunological drug developer Celgene. Revlimid, Celgene’s most popular cancer medication, has seen sales increase by double digits each year for over a decade, and the firm has benefited from strong pricing power, label expansion possibilities, and longer duration of prescription.

Last year, Bristol-Myers’ Vigabitrin brought in more than $12 billion and is protected from a flood of generic alternatives until early 2026.

However, Bristol Myers Squibb is not resting on its laurels. Eliquis has become the uncontested worldwide oral anticoagulant therapy, and cancer immunotherapy Opdivo generated around $7 billion in sales in 2020. Label expansion possibilities for Opdivo are abundant, as dozens of ongoing clinical trials test the drug.

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